Global Self Storage Inc

Previous wording

On July 6, 2021, certain wholly owned subsidiaries (“Amended Credit Facility Secured Subsidiaries”) of the Company entered into a first amendment to the Credit Facility Loan Agreement (collectively, the “Amended Credit Facility Loan Agreement”) between the Amended Credit Facility Secured Subsidiaries and The Huntington National Bank, successor by merger to TCF National Bank (“Amended Credit Facility Lender”). Under the Amended Credit Facility Loan Agreement, the Amended Credit Facility Secured Subsidiaries may borrow from the Amended Credit Facility Lender in the principal amount of up to $15 million, reduced to $14.75 million and $14.5 million in years 2 and 3, respectively, pursuant to a promissory note (the “Amended Credit Facility Promissory Note”). The Amended Credit Facility Promissory Note bears an interest rate equal to 3% plus the greater of the One Month U.S. Dollar London Inter-Bank Offered Rate or 0.25% and is due to mature on July 6, 2024. The Company is considering, among other things, refinancing or finding a suitable replacement for the revolving line of credit in light of its upcoming maturity. The publication of LIBOR ceased after June 30, 2023. The Amended Credit Facility Loan Agreement provides for a replacement index based on the Secured Overnight Financing Rate (“SOFR”). The interest rate on the Amended Credit Facility Promissory Note subsequent to June 30, 2023, is equal to 3% plus the greater of SOFR plus 0.11448% or 0.25%. As of March 31, 2024, the effective interest rate was 8.44%. The obligations under the Amended Credit Facility Loan Agreement are secured by certain real estate assets owned by the Amended Credit Facility Secured Subsidiaries. The Company entered into an amended and restated guaranty of payment on July 6, 2021 (“Amended Credit Facility Guaranty,” and together with the Amended Credit Facility Loan Agreement, the Amended Credit Facility Promissory Note and related instruments, the “Amended Credit Facility Loan Documents”) to guarantee the payment to the Amended Credit Facility Lender of certain obligations of the Amended Credit Facility Secured Subsidiaries under the Amended Credit Facility Loan Agreement. The Company and the Amended Credit Facility Secured Subsidiaries paid customary fees and expenses in connection with their entry into the Amended Credit Facility Loan Documents. The Company also maintains a bank account at the Amended Credit Facility Lender. As of March 31, 2024, we have no withdrawn proceeds under the Amended Credit Facility Loan Agreement. We currently intend to strategically withdraw proceeds available under the Amended Credit Facility Loan Agreement to fund: (i) the acquisition of additional self storage properties, (ii) expansions at existing self storage properties in our portfolio, and/or (iii) joint ventures with third parties for the acquisition and expansion of self storage properties.

Current wording

On July 6, 2021, certain wholly owned subsidiaries (“Amended Credit Facility Secured Subsidiaries”) of the Company entered into a first amendment to the Credit Facility Loan Agreement (collectively, the “Amended Credit Facility Loan Agreement”) between the Amended Credit Facility Secured Subsidiaries and The Huntington National Bank, successor by merger to TCF National Bank (“Amended Credit Facility Lender”). Under the Amended Credit Facility Loan Agreement, the Amended Credit Facility Secured Subsidiaries were able to borrow from the Amended Credit Facility Lender in the principal amount of up to $15 million, reduced to $14.75 million and $14.5 million in years 2 and 3, respectively, pursuant to a promissory note (the “Amended Credit Facility Promissory Note”). The Amended Credit Facility Promissory Note bore an interest rate equal to 3% plus the greater of the One Month U.S. Dollar London Inter-Bank Offered Rate or 0.25% and was due to mature on July 6, 2024. As of June 30, 2024, the effective interest rate was 8.44%. The publication of LIBOR ceased after June 30, 2023. The Amended Credit Facility Loan Agreement provided for a replacement index based on the Secured Overnight Financing Rate (“SOFR”). The interest rate on the Amended Credit Facility Promissory Note subsequent to June 30, 2023, was equal to 3% plus the greater of SOFR plus 0.11448% or 0.25%. The obligations under the Amended Credit Facility Loan Agreement were secured by certain real estate assets owned by the Amended Credit Facility Secured Subsidiaries. The Company entered into an amended and restated guaranty of payment on July 6, 2021 (“Amended Credit Facility Guaranty,” and together with the Amended Credit Facility Loan Agreement, the Amended Credit Facility Promissory Note and related instruments, the “Amended Credit Facility Loan Documents”) to guarantee the payment to the Amended Credit Facility Lender of certain obligations of the Amended Credit Facility Secured Subsidiaries under the Amended Credit Facility Loan Agreement. The Company and the Amended Credit Facility Secured Subsidiaries paid customary fees and expenses in connection with their entry into the Amended Credit Facility Loan Documents.

Previous wording

On January 14, 2022, the Company entered into an At Market Offering Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (the “Agent”) pursuant to which the Company may sell, from time to time, shares of common stock having an aggregate offering price of up to $15,000,000, through the Agent. During the twelve months ended December 31, 2022, under the Sales Agreement, the Company sold and issued an aggregate of 373,833 shares of common stock and raised aggregate gross proceeds of approximately $2,272,628, less sales commissions of approximately $45,491 and other offering costs resulting in net proceeds of $2,008,436. There were no shares of common stock sold during the three months ended March 31, 2024 and March 31, 2023 under the Sales Agreement.

Current wording

On January 14, 2022, the Company entered into an At Market Offering Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (the “Agent”) pursuant to which the Company may sell, from time to time, shares of common stock having an aggregate offering price of up to $15,000,000, through the Agent. During the twelve months ended December 31, 2022, under the Sales Agreement, the Company sold and issued an aggregate of 373,833 shares of common stock and raised aggregate gross proceeds of approximately $2,272,628, less sales commissions of approximately $45,491 and other offering costs resulting in net proceeds of $2,008,436. There were no shares of common stock sold during the three and six months ended June 30, 2024 and June 30, 2023 under the Sales Agreement.

Previous wording

We continue to actively review a number of store and store portfolio acquisition opportunities and have been working to further develop and expand our current stores. We did not complete any acquisitions in the three months ended March 31, 2024. In addition, we may pursue third-party management opportunities of properties owned by certain affiliates or joint venture partners for a fee, and utilize such relationships with third-party owners as a source for future acquisitions and investment opportunities. As of March 31, 2024, under our third-party management platform, Global MaxManagement SM, we managed one third-party owned property, which was previously rebranded as “Global Self Storage,” had 137,318-leasable square feet and was comprised of 619 climate-controlled and non-climate-controlled units located in Edmond, Oklahoma.

Current wording

We continue to actively review a number of store and store portfolio acquisition opportunities and have been working to further develop and expand our current stores. We did not complete any acquisitions in the three and six months ended June 30, 2024. In addition, we may pursue third-party management opportunities of properties owned by certain affiliates or joint venture partners for a fee, and utilize such relationships with third-party owners as a source for future acquisitions and investment opportunities. As of June 30, 2024, under our third-party management platform, Global MaxManagement SM, we managed one third-party owned property, which was previously rebranded as “Global Self Storage,” had 137,318-leasable square feet and was comprised of 619 climate-controlled and non-climate-controlled units located in Edmond, Oklahoma.

Previous wording

As of March 31, 2024, we had capital resources totaling approximately $24.0 million, comprised of $6.9 million of cash, cash equivalents, and restricted cash, $2.6 million of marketable securities, and $14.5 million available for withdrawal under the Amended Credit Facility Loan Agreement which matures on July 6, 2024. Capital resources derived from retained cash flow have been and are currently expected to continue to be negligible. Retained operating cash flow represents our expected cash flow provided by operating activities, less stockholder distributions and capital expenditures to maintain stores. These capital resources allow us to continue to execute our strategic business plan, which includes funding acquisitions, either directly or through joint ventures; expansion projects at our existing properties; and broadening our revenue base and pipeline of potential acquisitions through developing Global MaxManagement SM, our third-party management platform. Our board of directors regularly reviews our strategic business plan, including topics and metrices like capital formation, debt versus equity ratios, dividend policy, use of capital and debt, funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) performance, and optimal cash levels.

Current wording

The Company currently has capital resources totaling approximately $24.8 million, comprised of $7.1 million of cash, cash equivalents, and restricted cash and $2.7 million of marketable securities as of June 30, 2024, and $15 million available for withdrawal under the Second Amended Credit Facility Loan Agreement which matures on July 6, 2027. Capital resources derived from retained cash flow have been and are currently expected to continue to be negligible. Retained operating cash flow represents our expected cash flow provided by operating activities, less stockholder distributions and capital expenditures to maintain stores. These capital resources allow us to continue to execute our strategic business plan, which includes funding acquisitions, either directly or through joint ventures; expansion projects at our existing properties; and broadening our revenue base and pipeline of potential acquisitions through developing Global MaxManagement SM, our third-party management platform. Our board of directors regularly reviews our strategic business plan, including topics and metrices like capital formation, debt versus equity ratios, dividend policy, use of capital and debt, funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) performance, and optimal cash levels.

Previous wording

Total revenues decreased from $3,037,952 during the three months ended March 31, 2023 to $3,034,040 during the three months ended March 31, 2024, a decrease of 0.1%, or $3,912. Rental income decreased from $2,924,404 during the three months ended March 31, 2023 to $2,913,461 during the three months ended March 31, 2024, a decrease of 0.4%, or $10,943. The decrease was primarily attributable to lower move-in rental rates year-over-year across the United States and in the markets that we operate, which was partially offset by increases in occupancy and existing tenant rates under our proprietary revenue rate management program.

Current wording

Total revenues increased from $3,086,018 during the three months ended June 30, 2023 to $3,109,038 during the three months ended June 30, 2024, an increase of 0.7%, or $23,020. Rental income increased from $2,965,178 during the three months ended June 30, 2023 to $2,983,039 during the three months ended June 30, 2024, an increase of 0.6%, or $17,861. The increase was primarily attributable to increases in occupancy and existing tenant rates under our proprietary revenue rate management program, which was partially offset by lower move-in rental rates year-over-year across the United States and in the markets that we operate.

Previous wording

Other store related income consists of customer insurance fees, sales of storage supplies, and other ancillary revenues. Other store related income increased from $91,737 during the three months ended March 31, 2023 to $103,850 during the three months ended March 31, 2024, an increase of 13.2%, or $12,113.

Current wording

Other store related income consists of tenant insurance fees, sales of storage supplies, and other ancillary revenues. Other store related income increased from $98,375 during the three months ended June 30, 2023 to $108,489 during the three months ended June 30, 2024, an increase of 10.3%, or $10,114. The increase was primarily attributable to additional tenants subscribing to tenant insurance.

Previous wording

Income from our third-party management platform consists of management fees and customer insurance fees. Management fees and other income decreased from $21,811 during the three months ended March 31, 2023 to $16,729 during the three months ended March 31, 2024. The decrease was primarily attributable to the adjustment of fees for our third-party management services in accordance with current market rates.

Current wording

Income from our third-party management platform consists of management fees and customer insurance fees. Management fees and other income decreased from $22,465 during the three months ended June 30, 2023 to $17,510 during the three months ended June 30, 2024. The decrease was primarily attributable to the adjustment of fees for our third-party management services in accordance with current market rates.

Previous wording

Total operating expenses increased from $2,213,139 during the three months ended March 31, 2023 to $2,443,046 during the three months ended March 31, 2024, an increase of 10.4%, or $229,907, which was attributable to an increase in store level and general and administrative expenses. Store operating expenses increased from $1,121,337 during the three months ended March 31, 2023 to $1,231,116 during the three months ended March 31, 2024, an increase of 9.8%, or $109,779. The increase in store operating expenses was due primarily to increased expenses for marketing costs, employment costs, insurance, and real estate property taxes.

Current wording

Total operating expenses increased from $2,308,138 during the three months ended June 30, 2023 to $2,473,127 during the three months ended June 30, 2024, an increase of 7.1%, or $164,989, which was attributable to an increase in store level expenses and general and administrative expenses. Store operating expenses increased from $1,089,977 during the three months ended June 30, 2023 to $1,171,169 during the three months ended June 30, 2024, an increase of 7.4%, or $81,192. The increase in store operating expenses was due primarily to increased expenses for employment costs and property insurance.

Previous wording

General and administrative expenses increased from $679,712 during the three months ended March 31, 2023 to $802,730 during the three months ended March 31, 2024, an increase of 18.1%, or $123,018. The increase in general and administrative expenses during this period are primarily attributable to increased professional fees and non-recurring one-time information technology expenses to enhance cybersecurity and productivity.

Current wording

General and administrative expenses increased from $809,623 during the three months ended June 30, 2023 to $892,822 during the three months ended June 30, 2024, an increase of 10.3%, or $83,199. The increase in general and administrative expenses during this period are primarily attributable to increased professional fees and employment costs.

Previous wording

Depreciation and amortization increased from $406,841 during the three months ended March 31, 2023 to $406,925 during the three months ended March 31, 2024.

Current wording

Depreciation and amortization increased from $408,538 during the three months ended June 30, 2023 to $409,136 during the three months ended June 30, 2024.

Previous wording

As a result of the operating effects noted above, operating income decreased from $824,813 during the three months ended March 31, 2023 to $590,994 during the three months ended March 31, 2024, a decrease of 28.3%, or $233,819.

Current wording

As a result of the operating effects noted above, operating income decreased from $777,880 during the three months ended June 30, 2023 to $635,911 during the three months ended June 30, 2024, a decrease of 18.3%, or $141,969.

Previous wording

Unrealized gain on marketable equity securities was $362,050 during the three months ended March 31, 2023 and the unrealized loss on marketable equity securities was $174,878 during the three months ended March 31, 2024.

Current wording

Unrealized loss on marketable equity securities was $115,347 during the three months ended June 30, 2023 and the unrealized gain on marketable equity securities was $79,530 during the three months ended June 30, 2024.

Previous wording

For the three months ended March 31, 2023, net income was $992,541, or $0.09 per fully diluted share. For the three months ended March 31, 2024, net income was $266,150, or $0.02 per fully diluted share.

Current wording

For the three months ended June 30, 2023, net income was $578,070, or $0.05 per fully diluted share. For the three months ended June 30, 2024, net income was $591,530, or $0.05 per fully diluted share.

Previous wording

Business development which includes capital raising, store acquisition, and third-party management marketing expenses decreased from $5,249 during the three months ended March 31, 2023 to $2,275 during the three months ended March 31, 2024. These costs primarily consist of costs incurred in connection with business development, capital raising, and future potential store acquisitions, and third-party management marketing expenses. Business development costs are typically non-recurring and fluctuate based on periodic business development and acquisition activity.

Current wording

Business development, capital raising, store acquisition, and third-party management marketing expenses decreased from $5,249 during the six months ended June 30, 2023 to $2,275 during the six months ended June 30, 2024. These costs primarily consist of costs incurred in connection with business development, capital raising, and future potential store acquisitions, and third-party management marketing expenses. Business development costs are typically non-recurring and fluctuate based on periodic business development and acquisition activity.

Previous wording

Interest expense on debt decreased from $235,888 during the three months ended March 31, 2023 to $204,843 during the three months ended March 31, 2024. This decrease was attributable to the change in fair value of the interest rate cap and cash settlements under the interest rate cap from the difference between the reference interest rate and the strike rate. The cash payments for the $20 million loan remain the same every month until June 2036 and are $107,699 per month.

Current wording

Interest expense on debt increased from $406,839 during the six months ended June 30, 2023 to $416,203 during the six months ended June 30, 2024. This increase was attributable to the change in fair value of the interest rate cap partially offset by cash settlements under the interest rate cap from the difference between the reference interest rate and the strike rate and lower interest payments under the Term Loan Agreement. The cash payments for the $20 million Term Loan Agreement remain the same every month until June 2036 and are $107,699 per month.

Previous wording

Dividend, interest, and other income was $41,566 during the three months ended March 31, 2023 and $54,877 during the three months ended March 31, 2024. The increase was attributable to the dividends earned on money market mutual fund balances.

Current wording

Dividend, interest, and other income was $128,054 during the six months ended June 30, 2023 and $142,327 during the six months ended June 30, 2024. The increase was attributable to the dividends earned on money market mutual fund balances.

Previous wording

Distributions for each of the three months ended March 31, 2024 and 2023 were $0.0725 per share. The Company’s closing market price as of March 31, 2024 and March 31, 2023 was $4.45 and $5.14, respectively. Past market price performance and distribution levels do not guarantee similar results in the future.

Current wording

Distributions for each of the three months ended June 30, 2024 and 2023 were $0.0725 per share. The Company’s closing market price as of June 30, 2024 and June 30, 2023 was $4.86 and $5.05, respectively. Past market price performance and distribution levels do not guarantee similar results in the future.

Previous wording

The following discussion and analysis of our same-store self storage operations are presented on a comparative basis for the three months ended March 31, 2024.

Current wording

The following discussion and analysis of our same-store self storage operations are presented on a comparative basis for the six months ended June 30, 2024.

Previous wording

Same-store occupancy at March 31, 2024 increased by 3.4% to 91.3% from 87.9% at March 31, 2023. As of May 1, 2024, occupancy at the Company’s same-store properties was 92.8%.

Current wording

Same-store occupancy at June 30, 2024 increased by 2.5% to 93.0% from 90.5% at June 30, 2023. As of July 31, 2024, occupancy at the Company’s same-store properties was 94.2%.

Previous wording

Same-store revenues were flat for the three months ended March 31, 2024 versus the same period in 2023. Same-store cost of operations increased by 9.8% for the three months ended March 31, 2024 versus the same period in 2023. Same-store NOI decreased by 5.7% for the three months ended March 31, 2024 versus the same period in 2023. The decrease in same-store NOI during the three months ended March 31, 2024 was due primarily to more muted revenue growth and increased cost of operations.

Current wording

Same-store revenues increased by 0.9% and 0.5% for the three and six months ended June 30, 2024 versus the same periods in 2023. Same-store cost of operations increased by 7.4% and 8.6% for the three and six months ended June 30, 2024 versus the same periods in 2023. Same-store NOI decreased by 2.7% and 4.2% for the three and six months ended June 30, 2024 versus the same periods in 2023. The decrease in same-store NOI during the three months ended June 30, 2024 was due primarily to more muted revenue growth and increased cost of operations.

Previous wording

We believe that our results were driven by, among other things, our internet and digital marketing initiatives which helped maintain our overall average same-store occupancy of approximately 91% as of March 31, 2024. Also, contributing to our results were our customer service efforts which we believe were essential in building local brand loyalty, resulting in strong referral and word-of-mouth market demand for our storage units and services. Another contributing factor to our results was our competitor move-in rate metrics analysis which employs internet data scraping and other methods to help keep our storage unit move-in rates “in the market,” and our revenue rate management program which helped increase existing tenant rates while optimizing store occupancy.

Current wording

We believe that our results were driven by, among other things, our internet and digital marketing initiatives which helped maintain our overall average same-store occupancy of approximately 93% as of June 30, 2024. Also, contributing to our results were our customer service efforts which we believe were essential in building local brand loyalty, resulting in strong referral and word-of-mouth market demand for our storage units and services. Another contributing factor to our results was our competitor move-in rate metrics analysis which employs internet data scraping and other methods to help keep our storage unit move-in rates “in the market,” and our revenue rate management program which helped increase existing tenant rates while optimizing store occupancy.

Previous wording

For the three months ended March 31, 2024, same-store revenue was flat versus the same period in 2023. Same-store average overall square foot occupancy for all of the Company’s same-store properties increased to 91.3% at March 31, 2024, up from 87.9% at March 31, 2023. As of May 1, 2024, occupancy at the Company’s same-store properties was 92.8%.

Current wording

For the three and six months ended June 30, 2024, same-store revenue increased 0.9%, or $27,975, and 0.5%, or $29,145, respectively, versus the same periods in 2023. Same-store average overall square foot occupancy for all of the Company’s same-store properties increased to 93.0% at June 30, 2024, up from 90.5% at June 30, 2023. As of July 31, 2024, occupancy at the Company’s same-store properties was 94.2%.

Previous wording

As of March 31, 2024, we observed no material degradation in rent collections. However, we believe that our bad debt losses could increase from historical levels, due to (i) cumulative stress (such as inflation, COVID-19, recession fears, etc.) on our customers’ financial capacity and (ii) reduced rent recoveries from auctioned units.

Current wording

As of June 30, 2024, we observed no material degradation in rent collections. However, we believe that our bad debt losses could increase from historical levels, due to (i) cumulative stress (such as inflation, recession fears, etc.) on our customers’ financial capacity and (ii) reduced rent recoveries from auctioned units.

Previous wording

We currently expect rental income growth, if any, to come from a combination of the following: (i) continued existing tenant rent increases, (ii) higher rental rates charged to new tenants, (iii) lower promotional discounts, and (iv) higher occupancies. Our future rental income growth will likely also be dependent upon many factors for each market that we operate in, including, among other things, demand for self storage space, the level of competitor supply of self storage space, and the average length of stay of our tenants. Increasing existing tenant rental rates, generally on an annual basis, is a key component of our revenue growth. We typically determine the level of rental increases based upon our expectations regarding the impact of existing tenant rate increases on incremental move-outs. We currently expect existing tenant rent increases for the remainder of 2024, if any, to be lower than those in the prior year.

Current wording

We currently expect rental income growth, if any, to come from a combination of the following: (i) continued existing tenant rent increases, (ii) higher rental rates charged to new tenants, (iii) lower promotional discounts, and (iv) higher occupancies. Our future rental income growth will likely also be dependent upon many factors for each market that we operate in, including, among other things, demand for self storage space, the level of competitor supply of self storage space, and the average length of stay of our tenants. Increasing existing tenant rental rates, generally on an annual basis, is a key component of our revenue growth. We typically determine the level of rental increases based upon our expectations regarding the impact of existing tenant rate increases on incremental move-outs. We currently expect existing tenant rent increases for the remainder of 2024, if any, to be similar to those in the prior year.

Previous wording

Importantly, we continue to refine our ongoing revenue rate management program which includes regular internet data scraping of local competitors’ prices. We do this in seeking to maintain our competitive market price advantage for our various sized storage units at our stores. This program helps us in seeking to maximize each store’s occupancies and our self storage revenue and NOI. We believe that, through our various marketing initiatives, we can continue to attract high quality, long term tenants who we expect will be storing with us for years. As of March 31, 2024, our average tenant duration of stay was approximately 3.3 years, down from 3.4 years as of March 31, 2023.

Current wording

Importantly, we continue to refine our ongoing revenue rate management program which includes regular internet data scraping of local competitors’ prices. We do this in seeking to maintain our competitive market price advantage for our various sized storage units at our stores. This program helps us in seeking to maximize each store’s occupancies and our self storage revenue and NOI. We believe that, through our various marketing initiatives, we can continue to attract high quality, long term tenants who we expect will be storing with us for years. As of June 30, 2024, our average tenant duration of stay was approximately 3.3 years, which was about the same as of June 30, 2023.

Previous wording

For the three months ended March 31, 2024, same-store cost of operations increased 9.8%, or $109,779, versus the same period in 2023. This increase in same-store cost of operations for the three months ended March 31, 2024 was due primarily to increased expenses for employment costs, real estate property taxes, insurance, and marketing costs.

Current wording

For the three and six months ended June 30, 2024, same-store cost of operations increased 7.4%, or $81,192, and 8.6%, or $190,970, respectively, versus the same periods in 2023. This increase in same-store cost of operations for the three and six months ended June 30, 2024 was due primarily to increased expenses for employment costs, real estate property taxes, and property insurance costs.

Previous wording

Employment. On-site store manager, regional manager, and district manager payroll expense increased 10.1%, or $35,064 for the three months ended March 31, 2024 versus the same period in 2023. The increase was due primarily to routine employee hiring and inflationary increases in compensation rates for existing employees. We currently expect inflationary increases in compensation rates for existing employees and other increases in compensation costs as we potentially add new stores.

Current wording

Employment. On-site store manager, regional manager, and district manager payroll expense increased 13.6%, or $41,773, and 11.7%, or $76,837, for the three and six months ended June 30, 2024, respectively, versus the same periods in 2023. The increase was due primarily to routine employee hiring and inflationary increases in compensation rates for existing employees. We currently expect inflationary increases in compensation rates for existing employees and other increases in compensation costs as we potentially add new stores.

Previous wording

Real Estate Property Tax. Store property tax expense increased 5.9%, or $23,219 for the three months ended March 31, 2024 versus the same period in 2023. When compared to store property tax expense for the three months ended March 31, 2024, we currently expect store property tax expense to increase during 2024 due to increased property assessment valuations. See the section titled “Property Tax Expenses at Dolton, IL” for additional detail.

Current wording

Real Estate Property Tax. Store property tax expense increased 2.1%, or $8,639, and 4.0%, or $31,858, for the three and six months ended June 30, 2024, respectively, versus the same periods in 2023. When compared to store property tax expense for the three months ended June 30, 2024, we currently expect store property tax expense to increase during 2024 due to increased property assessment valuations. See the section titled “Property Tax Expenses at Dolton, IL” for additional detail regarding property tax relief obtained for our Dolton, IL property in 2024, which will partially offset our increased real estate property taxes.

Previous wording

Administrative. We classify administrative expenses as bank charges related to processing the stores’ cash receipts, credit card fees, repairs and maintenance, utilities, landscaping, alarm monitoring and trash removal. Administrative expenses decreased 2.7%, or $6,034 in the three months ended March 31, 2024 versus the same period in 2023. We experienced a decrease in administrative expenses for the three months ended March 31, 2024 due primarily to decreased repairs and maintenance expense and decreased utilities usage. We currently expect moderate increases in other direct store costs in 2024.

Current wording

Administrative. We classify administrative expenses as bank charges related to processing the stores’ cash receipts, credit card fees, repairs and maintenance, utilities, landscaping, alarm monitoring and trash removal. Administrative expenses increased 10.4%, or $20,200, and 3.4%, or $14,166, in the three and six months ended June 30, 2024, respectively, versus the same periods in 2023. We experienced an increase in administrative expenses for the six months ended June 30, 2024 due primarily to increased landscaping and cloud-based gate access control upgrades, which were partially offset by decreased utilities usage. We currently expect moderate increases in other direct store costs in 2024.

Previous wording

Repairs and Maintenance. Repairs and maintenance expense decreased 20.6%, or $8,252 for the three months ended March 31, 2024 versus the same period in 2023. These expenses decreased during the three months ended March 31, 2024 versus the same period in 2023 primarily due to one-off repairs and maintenance completed in the three months ended March 31, 2023.

Current wording

Repairs and Maintenance. Repairs and maintenance expense increased 14.1%, or $7,138, and decreased 1.2%, or $1,115, for the three and six months ended June 30, 2024, respectively, versus the same periods in 2023. These expenses increased during the three months ended June 30, 2024 versus the same period in 2023 primarily due to one-off repairs and maintenance completed in the three months ended June 30, 2024.

Previous wording

Utilities. Our utility expenses are currently comprised of electricity, oil, and gas costs, which vary by store and are dependent upon energy prices and usage levels. Changes in usage levels are driven primarily by weather and temperature. Also, affecting our utilities expenses over time is our ongoing LED light replacement program at all of our stores which has already resulted in lower electricity usage. Utilities expense decreased 6.7%, or $6,279 for the three months ended March 31, 2024 versus the same period in 2023. It is difficult to estimate future utility costs because weather, temperature, and energy prices are volatile and unpredictable. However, based upon current trends and expectations regarding commercial electricity rates, we currently expect inflationary increases in rates combined with lower usage resulting in higher net utility costs for the remainder of 2024.

Current wording

Utilities. Our utility expenses are currently comprised of electricity, oil, and gas costs, which vary by store and are dependent upon energy prices and usage levels. Changes in usage levels are driven primarily by weather and temperature. Also, affecting our utilities expenses over time is our ongoing LED light replacement program at all of our stores which has already resulted in lower electricity usage. Utilities expense decreased 4.6%, or $2,383, and 6.0%, or $8,662, for the three and six months ended June 30, 2024, respectively, versus the same periods in 2023. It is difficult to estimate future utility costs because weather, temperature, and energy prices are volatile and unpredictable. However, based upon current trends and expectations regarding commercial electricity rates, we currently expect inflationary increases in rates combined with lower usage resulting in similar utility costs for the remainder of 2024.

Previous wording

Landscaping. Landscaping expenses, which include snow removal costs, increased 20.3%, or $5,155 for the three months ended March 31, 2024 versus the same period in 2023. The increase in landscaping expense during the three months ended March 31, 2024 versus the same period in 2023 was primarily due to a increase of one-off snow removal expenses during the three months ended March 31, 2024. Landscaping expense levels are dependent upon many factors such as weather conditions, which can impact landscaping needs including, among other things, snow removal, inflation in material and labor costs, and random events. We currently expect inflationary increases in landscaping expense for the remainder of 2024, excluding snow removal expense, which is primarily weather dependent and unpredictable.

Current wording

Landscaping. Landscaping expenses, which include snow removal costs, increased 26.1%, or $6,154, and 23.1%, or $11,309, for the three and six months ended June 30, 2024, respectively, versus the same periods in 2023. The increase in landscaping expense during the three and six months ended June 30, 2024 versus the same periods in 2023 was primarily due to an increase of one-off snow removal and inflationary increases during the six months ended June 30, 2024. Landscaping expense levels are dependent upon many factors such as weather conditions, which can impact landscaping needs including, among other things, snow removal, inflation in material and labor costs, and random events. We currently expect inflationary increases in landscaping expense for the remainder of 2024, excluding snow removal expense, which is primarily weather dependent and unpredictable.

Previous wording

Marketing. Marketing expense is comprised principally of internet advertising and the operating costs of our 24/7 kiosk and telephone call and reservation center. Marketing expense varies based upon demand, occupancy levels, and other factors. Internet advertising, in particular, can increase or decrease significantly in the short term in response to these factors. Marketing expense increased 22.0%, or $15,960 for the three months ended March 31, 2024 versus the same period in 2023, primarily due to increased spending on digital advertising, and to a lesser extent, inflationary increases in costs. Based upon current trends in move-ins, move-outs, and occupancies, we currently expect marketing expense to increase at a nominal rate for the remainder of 2024.

Current wording

Marketing. Marketing expense is comprised principally of internet advertising and the operating costs of our 24/7 kiosk and telephone call and reservation center. Marketing expense varies based upon demand, occupancy levels, and other factors. Internet advertising, in particular, can increase or decrease significantly in the short term in response to these factors. Marketing expense decreased 15.2%, or $14,775, and increased 0.7%, or $1,184, for the three and six months ended June 30, 2024, respectively, versus the same periods in 2023. Marketing expense decreased during the three months ended June 30, 2024 primarily due to decreased spending on digital advertising. Based upon current trends in move-ins, move-outs, and occupancies, we currently expect marketing expense to increase at a nominal rate for the remainder of 2024.

Previous wording

General. Other direct store costs include general and administrative expenses incurred at the stores. General expenses include items such as store insurance, business license costs, and the cost of operating each store’s rental office including supplies and telephone and data communication lines. General expenses increased 55.3%, or $41,089 for the three months ended March 31, 2024 versus the same period in 2023, primarily due to increased expense for insurance, recruitment and training, uniforms, and branded merchandise to support our customer loyalty program. We currently expect moderate increases in direct store costs during the remainder of 2024.

Current wording

General. Other direct store costs include general and administrative expenses incurred at the stores. General expenses include items such as store insurance, business license costs, and the cost of operating each store’s rental office including supplies and telephone and data communication lines. General expenses increased 43.6%, or $32,528, and 49.5%, or $73,617, for the three and six months ended June 30, 2024, respectively, versus the same periods in 2023, primarily due to increased expense for property insurance, recruitment and training, uniforms, and branded merchandise to support our customer loyalty program. We currently expect moderate increases in direct store costs during the remainder of 2024.

Previous wording

Lien Administration. Lien administration expenses increased 10.1%, or $481 in the three months ended March 31, 2024 versus the same period in 2023.

Current wording

Lien Administration. Lien administration expenses decreased 15.4%, or $668, and 2.1%, or $187, in the three and six months ended June 30, 2024, respectively, versus the same periods in 2023.

Previous wording

Late in the third quarter of 2017, our Dolton, IL property was reassessed by the municipality and separately, our Class 8 tax incentive renewal hearing was held. As a result of those two events, our Dolton, IL property was reassessed at approximately 52% higher and the Class 8 tax incentive was not renewed. These events were applied retroactively to take effect on January 1, 2017. Property tax expenses have increased to $399,000 during 2020, $417,000 during 2021, $532,000 during 2022, and $559,000 during 2023. The Class 8 tax incentive phased out over the years 2017, 2018, 2019, 2020 and 2021. Both the property tax reassessment and our Class 8 tax incentive renewal status are currently under appeal. However, there is no guarantee that either the assessment will be reduced or our Class 8 tax incentive status will be reinstated.

Current wording

Late in the third quarter of 2017, our Dolton, IL property was reassessed by the municipality and separately, our Class 8 tax incentive renewal hearing was held. As a result of those two events, our Dolton, IL property was reassessed at approximately 52% higher and the Class 8 tax incentive was not renewed. These events were applied retroactively to take effect on January 1, 2017. Property tax expenses have increased to $399,000 during 2020, $417,000 during 2021, $532,000 during 2022, and $559,000 during 2023. The Class 8 tax incentive phased out over the years 2017, 2018, 2019, 2020 and 2021. In 2024, tax relief was granted resulting in an approximate 17.9% reduction in tax liability to the real estate property taxes for our Dolton, IL property. We are continuing to appeal the property tax reassessment and our Class 8 tax incentive renewal status for further tax relief. However, there is no guarantee that either the assessment will be reduced or our Class 8 tax incentive status will be reinstated.

Previous wording

FFO decreased 18.3%, or $189,379, for the three months ended March 31, 2024, versus the same period in 2023. FFO per diluted share decreased from $0.09 per share to $0.08 per share for the three months ended March 31, 2024, versus the same period in 2023. AFFO decreased 14.7%, or $159,136 for the three months ended March 31, 2024, versus the same period in 2023. AFFO per diluted share decreased from $0.10 per share to $0.08 per share for the three months ended March 31, 2024, versus the same period in 2023.

Current wording

FFO decreased 16.4%, or $180,819, and 17.3%, or $370,195, for the three and six months ended June 30, 2024, respectively, versus the same periods in 2023. FFO per diluted share decreased from $0.10 per share to $0.08 per share, and from $0.19 per share to $0.16 per share, for the three and six months ended June 30, 2024, respectively, versus the same periods in 2023. AFFO decreased

Previous wording

Unrealized gains and losses on the Company’s investment in marketable equity securities for the three months ended March 31, 2024 and 2023 were a loss of $174,878 and and a gain of $362,050, respectively. As we continue to acquire and/or develop additional stores, as part of the funding for such activities, we may liquidate our investment in marketable equity securities and potentially realize gains or losses. As of March 31, 2024, our cumulative unrealized gain on marketable equity securities was $1,844,664. There were no realized gains or losses for the three months ended March 31, 2024.

Current wording

Unrealized gains and losses on the Company’s investment in marketable equity securities for the six months ended June 30, 2024 and 2023 were a loss of $95,348 and a gain of $246,703, respectively. As we continue to acquire and/or develop additional stores, as part of the funding for such activities, we may liquidate our investment in marketable equity securities and potentially realize gains or losses. As of June 30, 2024, our cumulative unrealized gain on marketable equity securities was $1,924,194. There were no realized gains or losses for the six months ended June 30, 2024.