NASDAQ: SELF. Owner/Operator of Self Storage Properties in the Northeast, Mid-Atlantic and Midwest. Corporate Presentation June 2018 NASDAQ:SELF SELF

Transcription

1 NASDAQ: SELF Owner/Operator of Self Storage Properties in the Northeast, Mid-Atlantic and Midwest Corporate Presentation June 2018

2 Legal Disclaimer Cautionary Note Regarding Forward Looking Statements Certain information presented in this presentation may contain forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of Forward looking statements include statements concerning Global Self Storage, Inc's (the "Company") plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions or otherwise, and other information that is not historical information. In some cases, forward looking statements can be identified by terminology such as believes, expects, estimates, may, will, should, anticipates or intends, or the negative of such terms or other comparable terminology, or by discussions of strategy. All forward-looking statements by the Company involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of the Company, which may cause the Company s actual results to be materially different from those expressed or implied by such statements. The Company may also make additional forward looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by the Company or on its behalf, are also expressly qualified by these cautionary statements. Investors should carefully consider the risks, uncertainties, and other factors, together with all of the other information included in the Company s filings with the Securities and Exchange Commission (the SEC ) and similar information. All forward-looking statements, including without limitation, the Company s examination of historical operating trends and estimates of future earnings, are based upon the Company s current expectations and various assumptions. The Company s expectations, beliefs and projections are expressed in good faith, but there can be no assurance that the Company s expectations, beliefs and projections will result or be achieved. All forward looking statements apply only as of the date made. The Company undertakes no obligation to publicly update or revise forward looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events. There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this presentation. Any forward-looking statements should be considered in light of the risks referenced in the Company s filings with the SEC. Certain information contained in this presentation has been supplied by third parties. While the Company believes such sources are reliable, the Company cannot guarantee the accuracy of any such information and does not represent that such information is accurate or complete. All Company financial results contained herein are qualified in their entirety by reference to the Company s quarterly and annual reports, filings with the SEC and other related public disclosures. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful under the securities laws of any such state. Copyright 2018 Global Self Storage, Inc. All Rights Reserved. 2

3 Important Cautions Regarding Non-GAAP Measures and Same-Store Self Storage Operations Definition Non-GAAP Measures This presentation contains certain non-gaap financial measures. Funds from Operations ( FFO ) and FFO per share are non-gaap measures defined by the National Association of Real Estate Investment Trusts ( NAREIT ) and are considered helpful measures of REIT performance by REITs and many REIT analysts. NAREIT defines FFO as a REIT s net income, excluding gains or losses from sales of property, and adding back real estate depreciation and amortization. FFO and FFO per share are not a substitute for net income or earnings per share. FFO is not a substitute for GAAP net cash flow in evaluating our liquidity or ability to pay dividends, because it excludes financing activities presented on our statements of cash flows. In addition, other REITs may compute these measures differently, so comparisons among REITs may not be helpful. However, the Company believes that to further understand the performance of its stores, FFO should be considered along with the net income and cash flows reported in accordance with GAAP and as presented in the Company s financial statements. Adjusted FFO ( AFFO ) represents FFO excluding the effects of business development and acquisition related costs and non-recurring items, which we believe are not indicative of the Company s operating results. We present AFFO because we believe it is a helpful measure in understanding our results of operations insofar as we believe that the items noted above that are included in FFO, but excluded from AFFO, are not indicative of our ongoing operating results. We also believe that the investment community considers our AFFO (or similar measures using different terminology) when evaluating us. Because other REITs or real estate companies may not compute AFFO in the same manner as we do, and may use different terminology, our computation of AFFO may not be comparable to AFFO reported by other REITs or real estate companies. We believe net operating income or NOI is a meaningful measure of operating performance because we utilize NOI in making decisions with respect to, among other things, capital allocations, determining current store values, evaluating store performance, and in comparing period-to-period and market-to-market store operating results. In addition, we believe the investment community utilizes NOI in determining operating performance and real estate values, and does not consider depreciation expense because it is based upon historical cost. NOI is defined as net store earnings before general and administrative expenses, interest, taxes, depreciation, and amortization. A reconciliation of this measure to its most directly comparable GAAP measure is included in the Appendix to this presentation. NOI is not a substitute for net income, net operating cash flow, or other related GAAP financial measures, in evaluating our operating results. Same-Store Self Storage Operations Definition We consider our same-store portfolio to consist of only those stores owned and operated on a stabilized basis at the beginning and at the end of the applicable periods presented. We consider a store to be stabilized once it has achieved an occupancy rate that we believe, based on our assessment of market-specific data, is representative of similar self-storage assets in the applicable market for a full year measured as of the most recent January 1 and has not been significantly damaged by natural disaster or undergone significant renovation or expansion. We believe that same-store results are useful to investors in evaluating our performance because they provide information relating to changes in store-level operating performance without taking into account the effects of acquisitions, dispositions or new ground-up developments. At March 31, 2018, we owned ten same-store properties and 1 non-same-store property. The Company believes that by providing same-store results from a stabilized pool of stores, with accompanying operating metrics including, but not limited to variances in occupancy, rental revenue, operating expenses, NOI, etc., stockholders and potential investors are able to evaluate operating performance without the effects of non-stabilized occupancy levels, rent levels, expense levels, acquisitions or completed developments. Same-store results should not be used as a basis for future same-store performance or for the performance of the Company's stores as a whole. 3

4 Key Stats: SELF (NasdaqCM) Share Price (6/4/18) $ Week Low/High $3.92 / $4.64 Market Cap Enterprise Value $32.9M $50.2M Common Shares Out. (4/23/18) 7.7M Dividends Per Share (Trailing 12 Months) $0.26 Dividend Yield 6.1% Free Float 7.3M Fiscal Year End December 31 Avg. Daily Volume 3 mo. 11,065 Insider Holdings (4/30/18) 6.6% Source: Capital IQ, Yahoo! Finance, Global Self Storage, Inc. 4

5 Who We Are Global Self Storage is a self-administered and selfmanaged real estate investment trust ( REIT ) that owns, operates, manages, acquires, develops and redevelops self storage properties We seek to acquire properties where our professional management and best practices can improve operations With our recent acquisitions, we now own and operate 11 self storage properties in the Northeast, Mid-Atlantic, and Midwest Our properties total 762,592 square feet of leasable space* * As of 3/31/18; Includes outside parking (RV, boat, auto), retail, office and commercial space. 5

6 $43.0B $41.0B $39.0B $37.0B $35.0B $33.0B $31.0B $29.0B $27.0B $25.0B $23.0B $21.0B $19.0B $17.0B $15.0B $70.0K $68.0K $66.0K $64.0K $62.0K $60.0K $58.0K $56.0K $54.0K $52.0K $50.0K Growing Self Storage Industry Households with a self storage unit have increased from 1 in 17 in to 1 in 11 today 2 U.S. self storage industry expected to reach $40.2B in 2022, up 19% from Total self storage facilities nationwide expected to surpass 60,000 by Self storage acquisitions in 2016 totaled nearly $5.0 billion versus nearly $3.0 billion in $33.8B Projected U.S. Self Storage Market Growth 3 Revenue $40.2B 1) 2) 3) 4) ) 6

7 $0. 3B Main Growth Driver: High Occupancy Rates Demand for storage units at all-time high, with average occupancy rates topping 92.8% in 2017 Demand supports opportunity for greater price expansion 75.7% U.S. Self Storage Occupancy 87.8% 89.1% 90.2% 91.2% 85.0% 79.7% 92.8% Sophisticated operators have the ability to increase rents while maintaining occupancy The general decreasing trend for move-in rate discounting also supports higher average rents Source: 2018 Self Storage Almanac

8 Focus on Secondary and Tertiary Markets Has Led to Outperformance of Peers 3 Year Avg. Same-Store Revenue Growth 3 Year Avg. Same-Store NOI Growth 10.0% 8.0% 6.0% 9.4% 6.0% 14.0% 12.0% 10.0% 8.0% 12.2% 7.7% 4.0% 2.0% 6.0% 4.0% 2.0% 0.0% SELF Public REITs 0.0% SELF Public REITs Global Self Storage has outperformed public peers that have experienced declining NOI growth due to increasing supply in top MSA markets Note: Based on information obtained in reports on From 10-K filed with the SEC by self storage REIT peers (PSA, EXR, LSI, NSA, and CUBE). 8

9 Industry Opportunities Continued ownership consolidation with large and midsize operators purchasing facilities owned and managed by smaller operators Growing difference in operational management expertise between the larger, more sophisticated operators and the rest of the field Internet and technology making it easier for consumers to rent units Self-service kiosks, Internet marketing, 24/7 call centers 9

10 Highly Fragmented Self Storage Market Top six publicly traded self storage companies (REITs & U-Haul) control only 18% of the market (7,780 properties) ~82% of the U.S. market share by square foot is not owned by a REIT ~33,000 of 44,000 self storage facilities in the U.S. are single owner-operators 74% of all self storage operators only manage one or two single properties 82% of U.S. market non-reit properties 5.8% 3.3% 2.1% 1.6% 3.4% 1.4% Source: 2018 Self Storage Almanac 10

11 Our Portfolio of Self Storage Facilities Facilities located in secondary or tertiary cities in the Northeast, Mid-Atlantic and Midwest Properties located near metropolitan areas Excellent road or highway exposure Prominent road-side signage Easily accessible Clean, well-maintained properties with minimal deferred maintenance Strong market fundamentals (demographics) High barriers to entry (zoning) As of 3/31/18; Includes outside parking (RV, boat, auto), retail, office and commercial space. Occupancy includes the impact of increased vacancy due to completed expansion and redevelopment projects at our facilities Bolingbrook, IL Dolton, IL Merrillville, IN Facilities 11 Units 5,595 Leasable Sq. Ft. 762,592 Occupancy 92.4% Rochester, NY Lima, OH Fishers, IN CT Sadsburyville, PA Summerville I & II, SC Millbrook, NY Clinton, 11

12 Our Total 762,592 Leasable Square Feet 58% Traditional Indoor Storage* 34% Climate Controlled Storage 8% Outdoor Storage Boats/Cars/RVs *Includes non-storage space; Percentage figures as of 3/31/18 12

13 Attracting and Retaining High Quality Tenants Focus on tenant quality over tenant quantity in our marketing and operational efforts Utilize referral marketing to generate new tenant inquiries Referrals generally produce our highest quality new tenants Strong internet and social media presence generate new tenant inquiries Select facilities offer referral discounts and complementary truck rental 13

14 Why Customers Choose Us: High Quality Service & Facilities Property managers are encouraged to maintain the highest security and cleanliness standards Employees are motivated to deliver courteous, attentive customer service All facilities include on-site 24/7 rental and payment kiosks as well as 24/7 customer service call centers Our goal is to make our customers experience as pleasant and hassle-free as possible Easy Gate Access 24/7 Security Monitoring 24/7 Rental & Payment Kiosks 14

15 GAAP Earnings 3 Months Ended March 31, Months Ended March 31, 2017 Change % Change Total Revenues $1,961,885 $1,749,626 $212, % Total Expenses $1,663,989 $1,555,105 $108, % Operating Income $297,896 $194,521 $103, % Net Income (Loss) $59,126 $(14,266) $73,392 NM Net Income (Loss) Per Share $0.01 $(0.00) $0.01 NM For further details, please refer to the Company s First Quarter Q. 15

16 Same-Store Properties Q vs Q Comparison 3 Months Ended March 31, 2018 March 31, 2017 Change % Change Revenues $1,775,254 $1,579,759 $195, % Costs of Operations $767,985 $633,710 $134, % Net Operating Income $1,007,269 $946,049 $61, % Sq. Ft. Occupancy 92.8% 89.1% 3.7% 4.2% Annual Revenue/Leased Sq. Ft. $11.21 $10.36 $ % For further details, please refer to the Company s First Quarter Q. Same-store occupancy does not include the impact from the Merrillville, IN expansion project completed in January

17 Combined Store Properties Q vs Q Comparison 3 Months Ended March 31, 2018 March 31, 2017 Change % Change Revenues $1,961,805 $1,749,247 $212, % Costs of Operations $846,838 $686,232 $160, % Net Operating Income $1,114,967 $1,063,015 $51, % Net Leasable Sq. Ft. at Period End 762, ,095 6, % Net Leased Sq. Ft. at Period End 704, ,928 24, % For further details, please refer to the Company s First Quarter Q. 17

18 FFO and AFFO For further details, please refer to the Company s First Quarter Q. 18

19 Operational Progress by Facility Year Unit Leasable Occupancy by Sq. Ft. 1 Opened Count Sq. Ft. Mar. 31, 2018 Mar. 31, 2017 Bolingbrook, IL , % 73.3% Clinton, CT , % 83.5% Dolton, IL , % 95.1% Fishers, IN , % 90.3% Lima, OH , % 95.0% Millbrook, NY , % 90.0% Rochester, NY , % 94.0% Sadsburyville, PA , % 90.0% Summerville I, SC , % 93.4% Summerville II, SC , % 89.0% *Merrillville, IN , % 97.6% TOTAL 5, , % 89.9% *Non-same stores 1) Occupancy by square feet includes the impact from expansion and redevelopment projects at our stores. 19

20 Bolingbrook: 296 North Weber Road Opened units 111,500 leasable sq. ft. 13,500 sq. ft. of outside storage (auto/rv/boat) 93.2% occupancy As of 3/31/18. For further details, please refer to the Company s First Quarter Q. 20

21 Clinton: 6 Heritage Park Road 182 units 30,338 leasable sq. ft. 84.3% occupancy Operating under Company management since December 31, 2016 As of 3/31/18. For further details, please refer to the Company s First Quarter Q. 21

22 Dolton: Woodlawn Avenue Opened units 86,590 leasable sq. ft. 9,000 sq. ft. of outside storage (auto/rv/boat) 93.1% occupancy As of 3/31/18. For further details, please refer to the Company s First Quarter Q. 22

23 Fishers: 96 th & Olio Road Opened in units 81,741 leasable sq. ft. 95.3% area occupancy Operating under Company management since September 26, 2016 As of 3/31/18. For further details, please refer to the Company s First Quarter Q. 23

24 Lima: 1910 W Robb Ave. 732 units 97,610 leasable sq. ft. 95.9% occupancy Operating under Company management since August 30, 2016 As of 3/31/18. For further details, please refer to the Company s First Quarter Q. 24

25 Millbrook: 3814 Route units 12,480 leasable sq. ft. 98.5% occupancy Operating under Company management since December 31, 2016 As of 3/31/18. For further details, please refer to the Company s First Quarter Q. Expecting to break ground in 2018 on the Millbrook store expansion, which, when completed, will add approximately 16,500 of gross square feet of all- climate- controlled units. The planning for the expansion is under development. 25

26 Rochester: 2255 Buffalo Road Opened units 68,061 leasable sq. ft. 97.0% occupancy Indoor, drive-thru, 100% climate controlled facility As of 3/31/18. For further details, please refer to the Company s First Quarter Q. 26

27 Sadsburyville: 21 Aim Boulevard Opened units 78,842 leasable sq. ft. 13,000 sq. ft. of outside storage (auto/rv/boat) 90.4% occupancy As of 3/31/18. For further details, please refer to the Company s First Quarter Q. 27

28 Summerville I: 1713 Old Trolley Road Opened in units 72,700 leasable sq. ft. 90.7% occupancy As of 3/31/18. For further details, please refer to the Company s First Quarter Q. 28

29 Summerville II: 900 North Gum Street Opened units 42,910 leasable sq. ft. 7,200 sq. ft. of outside storage (auto/rv/boat) 84.5% occupancy As of 3/31/18. For further details, please refer to the Company s First Quarter Q. 29

30 Merrillville: 6590 Broadway Opened in units 79,820 leasable sq. ft. 1,000 sq. ft. of outside storage (auto/rv/boat) 88.7% occupancy As of 3/31/18. For further details, please refer to the Company s First Quarter Q. The Merrillville store expansion was completed in January 2018 and added 13,300 leasable square feet of traditional drive-up storage units. As of March 31, 2018, 65.2% of the three-building expansion leasable square feet had been leased. Merrillville was a component of Non-Same Store results in Q

31 Acquisition and Expansion Opportunities We seek to acquire facilities where our professional management can: Improve revenue rate management Increase occupancy rates Expand leasable square footage on existing property Convert lower-rent outdoor or traditional units into higher-rent climate controlled units Add additional revenue streams such as tenants stored items insurance premiums 74% of all self storage operators in the U.S. only manage one or two properties Fishers, IN Lima, OH Millbrook, NY Clinton, CT 31

32 Key Takeaways Total revenues increased 12.1% in the first quarter of 2018 compared to the same period a year ago. Operating income was up 53.1% in Q compared to the same period a year ago. Same-store revenues were up 12.4% in Q compared to Q Same-store NOI was up 6.5% in Q compared to Q Combined store revenues were up 12.2% in the first quarter of 2018 compared to the first quarter of Combined store NOI was up 4.9% in Q compared to Q FFO per share totaled $0.05 per share and AFFO per share totaled $0.06 per share for Q Pricing power leading to rental rate growth maintaining occupancy while increasing rents. Company distributed $0.065 of dividends over the past 3 months. 1 Planned expansion of the Millbrook, NY store in ) As of March 31,

33 NASDAQ: SELF Global Self Storage Website: Global Self Storage, Inc. Mark C. Winmill President and CEO New York, NY (212) x201 Liolios Group, Inc. Scott Liolios or Najim Mostamand, CFA (949)

34 Appendix NASDAQ: SELF 34

35 Management Team Mark C. Winmill CEO & President Thomas O Malley CFO, Treasurer & Vice President Donald Klimoski II General Counsel, Secretary, CCO & Vice President Coe G. Eldredge Real Estate Acquisition Consultant Robert J. Mathers Property Operations, Vice President Ryan Dayhoff Customer Operations, Vice President Russell Kamerman Asst. General Counsel, Asst. Secretary, Asst. CCO & Vice President Mark Winmill has served as CEO of the company since its inception in 2012 and has over 36 years of real estate investing experience Mr. Winmill has led the acquisition, development and management of over 50 projects valued at over $300 million since 1982, including over $55 million of self storage properties since 2012 Prior to Global Self Storage, he was founder and CEO of Bull & Bear Securities, Inc. a nationwide discount broker, from 1987 until its sale to the Royal Bank of Canada in 1999 He is a Trustee of two charitable foundations, numerous family trusts and a Director of two other companies Thomas O Malley has served as Chief Financial Officer, Chief Accounting Officer, Treasurer and Vice President since 2005 Mr. O Malley has over 30 years of financial and operating experience in the real estate, financial services, and investment management sectors Prior to joining the company, Mr. O Malley was the assistant controller of the investment adviser Reich & Tang having previously been an audit manager at RSM (nee McGladrey) He is a certified public accountant Donald Klimoski II has served as our General Counsel, Secretary, Chief Compliance Officer and Vice President since 2017 Previously, Mr. Klimoski served as the Associate General Counsel of Commvault Systems, Inc., a publicly traded company listed on NASDAQ, from 2014 to 2017 Prior to leaving private practice, Mr. Klimoski was an associate at Sullivan and Cromwell LLP, where his practice focused on mergers and acquisitions, securities law, corporate governance, intellectual property and related matters, from 2008 to 2014 He is admitted as a member of the New York and New Jersey State Bars and the United States Patent and Trademark Office Coe Eldredge has served as an acquisitions review and development consultant for the Company since 2012 and has over 27 years of real estate investing and development experience Mr. Eldredge has participated in the acquisition and development of over $55 million of self storage properties Prior to his experience with Global Self Storage, and as the president of University Group, Purcellville, VA, during his long experience he has been involved in over 100 real estate projects valued at over $100 million. The University Group designs, builds and renovates homes, office buildings and light commercial spaces as well as provides consulting services for various commercial projects, specializing in self storage Robert Mathers has served as Vice President, Property Operations of the company since its inception in 2012 Mr. Mathers has over 30 years of real estate property operations management experience Ryan Dayhoff has served as Vice President, Customer Operations of the company since 2017 Mr. Dayhoff has over 13 years of experience leading the implementation of self storage processes and procedures, including customer operations, talent acquisition and assimilating new properties Previously, Mr. Dayhoff served as a District Manager at Extra Space Storage, from 2007 to 2017 Russell Kamerman has served as our Assistant General Counsel, Assistant Secretary, Assistant Chief Compliance Officer and Vice President since 2014 Previously, Mr. Kamerman was an associate at Fried, Frank, Harris, Shriver & Jacobson LLP and Kleinberg, Kaplan, Wolff & Cohen, P.C., where his practice focused on asset management, securities law, compliance, and other corporate matters, from 2008 to 2014 He is admitted as a member of the New York State Bar 35

36 Balance Sheet (unaudited) For further details, please refer to the Company s Q for the period ended March 31,

37 Income Statement (unaudited) For further details, please refer to the Company s Q for the period ended March 31,

38 Reconciliation of GAAP Net Income to Same- Store Net Operating Income For further details, please refer to the Company s Q for the period ended March 31,

39 Reconciliation of GAAP Net Income to Combined Store Net Operating Income For further details, please refer to the Company s Q for the period ended March 31,