Global Self Storage, Inc.

Previous wording

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements contained elsewhere in this annual report, which have been prepared in accordance with generally accepted accounting principles (“GAAP”). Our notes to the condensed consolidated financial statements contained elsewhere in this annual report describe the significant accounting policies essential to our condensed consolidated financial statements. Preparation of our financial statements requires estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions that we have used are appropriate and correct based on information available at the time they were made. These estimates, judgments and assumptions can affect our reported assets and liabilities as of the date of the financial statements, as well as the reported revenues and expenses during the period presented. If there are material differences between these estimates, judgments and assumptions and actual facts, our financial statements may be affected.

Current wording

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements contained elsewhere in this annual report, which have been prepared in accordance with generally accepted accounting principles (“GAAP”). Our notes to the consolidated financial statements contained elsewhere in this annual report describe the significant accounting policies essential to our condensed consolidated financial statements. Preparation of our financial statements requires estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions that we have used are appropriate and correct based on information available at the time they were made. These estimates, judgments and assumptions can affect our reported assets and liabilities as of the date of the financial statements, as well as the reported revenues and expenses during the period presented. If there are material differences between these estimates, judgments and assumptions and actual facts, our financial statements may be affected.

Previous wording

The Company was incorporated on December 12, 1996 under the laws of the state of Maryland. The Company has elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). To the extent the Company continues to qualify as a REIT, it will not generally be subject to U.S. federal income tax, with certain limited exceptions, on its taxable income that is distributed to its stockholders.

Current wording

The Company was incorporated on December 12, 1996 under the laws of the state of Maryland. The Company has elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that the Company continues to qualify as a REIT, it will not generally be subject to U.S. federal income tax, with certain limited exceptions, on its taxable income that is distributed to its stockholders.

Previous wording

On December 18, 2019, we completed a rights offering whereby we sold and issued an aggregate of 1,601,291 shares of our common stock (“common stock”) at the subscription price of $4.18 per whole share of common stock, pursuant to the exercise of subscriptions and oversubscriptions from our stockholders. We raised aggregate gross proceeds of approximately $6.7 million in the rights offering.

Current wording

On December 18, 2019, we completed a rights offering whereby we sold and issued an aggregate of 1,601,291 shares of our common stock, par value $0.01 per share (“common stock”), at the subscription price of $4.18 per whole share of common stock, pursuant to the exercise of subscriptions and oversubscriptions from our stockholders. We raised aggregate gross proceeds of approximately $6.7 million in the rights offering.

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 December 31, 2023, the effective interest rate was 8.46%. 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 December 31, 2023, we have not 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, 2024, certain wholly owned subsidiaries (“Second Amended Credit Facility Secured Subsidiaries”) of the Company entered into a second amendment to the Credit Facility Loan Agreement (collectively, the “Second Amended Credit Facility Loan Agreement”) between the Second Amended Credit Facility Secured Subsidiaries and The Huntington National Bank, successor by merger to TCF National Bank (“Second Amended Credit Facility Lender”). Under the Second Amended Credit Facility Loan Agreement, the Second Amended Credit Facility Secured Subsidiaries may borrow from the Second 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 “Second Amended Credit Facility Promissory Note”). The Second Amended Credit Facility Promissory Note bears an interest rate equal to 3% plus the greater of the One Month SOFR or 0.25% and is due to mature on July 6, 2027, with an option to extend the maturity to July 6, 2028. As of December 31, 2024, the effective interest rate was approximately 7.56%. An annual unused facility fee is charged based on the daily average of the unadvanced amount of the Second Amended Credit Facility Loan Agreement during the trailing twelve month period ending each June 30. The fee will be calculated at 0.25% per annum if the daily average of the unadvanced amount of the Second Amended Credit Facility Loan Agreement during such trailing twelve month period was greater than fifty percent, and will be calculated at 0.15% if the daily average of the unadvanced amount of the Second Amended Credit Facility Loan Agreement during such trailing twelve month period was less than or equal to fifty percent. The obligations under the Second Amended Credit Facility Loan Agreement are secured by certain real estate assets owned by the Second Amended Credit Facility Secured Subsidiaries. The Company entered into a second amended and restated guaranty of payment as of July 6, 2024 (“Second Amended Credit Facility Guaranty,” and together with the Second Amended Credit Facility Loan Agreement, the Second Amended Credit Facility Promissory Note and related instruments, the “Second Amended Credit Facility Loan Documents”) to guarantee the payment to the Second Amended Credit Facility Lender of certain obligations of the Second Amended Credit Facility Secured Subsidiaries under the Second Amended Credit Facility Loan Agreement. The Company and the Second Amended Credit Facility Secured Subsidiaries paid customary fees and expenses in connection with their entry into the Second Amended Credit Facility Loan Documents. The Company also maintains a bank account at the Second Amended Credit Facility Lender. As of December 31, 2024, we have no withdrawn proceeds under the Second Amended Credit Facility Loan Agreement. We currently intend to strategically withdraw proceeds available under the Second Amended Credit Facility Loan Agreemen…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

As of December 31, 2023, we had capital resources totaling approximately $24.3 million, comprised of $7.0 million of cash, cash equivalents, and restricted cash, $2.8 million of marketable securities, and $14.5 million available for withdrawal under the Amended Credit Facility Loan Agreement. 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. The Company's 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 $7.2 million of cash, cash equivalents, and restricted cash, and $2.6 million of marketable securities as of December 31, 2024, and $15 million available for withdrawal under the Second Amended Credit Facility Loan Agreement. 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. The Company's 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, with emphasis on 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. See the section titled "Non-GAAP Financial Measures" for the definition and use of FFO and AFFO.

Previous wording

We expect that the results of our operations will be affected by a number of factors. Many of the factors that will affect our operating results are beyond our control. The Company and its properties could be materially and adversely affected by the risks, or the public perception of the risks, related to, among other things, public health crises, natural disasters and geopolitical events, including the ongoing conflict between Russia, Belarus and Ukraine, the ongoing conflict between Israel and Hamas, financial and credit market volatility and disruptions, inflationary pressures, rising interest rates, supply chain issues, labor shortages and recessionary concerns.

Current wording

We expect that the results of our operations will be affected by a number of factors. Many of the factors that will affect our operating results are beyond our control. The Company and its properties could be materially and adversely affected by the risks, or the public perception of the risks, related to, among other things, public health crises, natural disasters and geopolitical events, including the ongoing conflict between Russia, Belarus and Ukraine, the ongoing conflict between Israel and Hamas, financial and credit market volatility and disruptions, inflationary pressures, interest rate fluctuations, supply chain issues, labor shortages and recessionary concerns.

Previous wording

Total revenues increased from $11,944,850 during the year ended December 31, 2022 to $12,190,715 during the year ended December 31, 2023, an increase of 2.1% or $245,865. Rental income increased from $11,485,511 during the year ended December 31, 2022 to $11,719,165 during the year ended December 31, 2023, an increase of 2.0% or $233,654‬. The increase in total revenues was due primarily to increased rental rates, and the results of our proprietary revenue rate management program of raising existing tenant rates.

Current wording

Total revenues increased from $12,190,715 during the year ended December 31, 2023 to $12,530,280 during the year ended December 31, 2024, an increase of 2.8% or $339,565. Rental income increased from $11,719,165 during the year ended December 31, 2023 to $12,024,552 during the year ended December 31, 2024, an increase of 2.6% or $305,387‬. The increase in total revenues was due primarily to increased occupancy rates, and the results of our proprietary revenue rate management program of raising existing tenant rates.

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 $375,571 in the year ended December 31, 2022 to $392,577 in the year ended December 31, 2023, an increase of 4.5% or $17,006. The increase was primarily attributable to an increase in insurance administration fees at our wholly-owned properties.

Current wording

Other store related income consists of customer insurance fees, sales of storage supplies, and other ancillary revenues. Other store related income increased from $392,577 in the year ended December 31, 2023 to $435,167 in the year ended December 31, 2024, an increase of 10.8% or $42,590. The increase was primarily attributable to an increase in insurance administration fees at our wholly-owned properties.

Previous wording

Total expenses increased from $8,417,660 during the year ended December 31, 2022 to $9,079,462 during the year ended December 31, 2023, an increase of 7.9% or $661,802, which was primarily due to an increase in certain general and administrative expenses and store operating expenses. Store operating expenses increased from $4,169,182 in the year ended December 31, 2022 to $4,549,038 in the year ended December 31, 2023, an increase of 9.1% or $379,856, which was primarily due to increased employment and real estate tax expenses.

Current wording

Total expenses increased from $9,079,462 during the year ended December 31, 2023 to $9,635,952 during the year ended December 31, 2024, an increase of 6.1% or $556,490, which was primarily due to an increase in certain general and administrative expenses and store operating expenses. Store operating expenses increased from $4,549,038 in the year ended December 31, 2023 to $4,739,995 in the year ended December 31, 2024, an increase of 4.2% or $190,957, which was primarily due to increased expenses in employment, repairs and maintenance, and insurance.

Previous wording

Depreciation and amortization increased from $1,619,239 in the year ended December 31, 2022 to $1,634,044 in the year ended December 31, 2023, an increase of 0.9% of $14,805.

Current wording

Depreciation and amortization increased from $1,634,044 in the year ended December 31, 2023 to $1,634,147 in the year ended December 31, 2024.

Previous wording

General and administrative expenses increased $295,401 for the year ended December 31, 2023 as compared to the year ended December 31, 2022. The change is primarily attributable to an increase in employment expenses.

Current wording

General and administrative expenses increased $382,473 for the year ended December 31, 2024 as compared to the year ended December 31, 2023. The change is primarily attributable to an increase in employment expenses and certain non-recurring legal and professional expenses.

Previous wording

Business development, capital raising, and store acquisition expenses decreased from $48,340 to $20,080 during the year ended December 31, 2023 as compared to the year ended December 31, 2022. These costs primarily consisted of consulting costs in connection with business development, capital raising, and future potential store acquisitions, and expenses related to our third party management platform marketing initiatives. The majority of these expenses are non-recurring and fluctuate based on business development activity during the time period.

Current wording

Business development, capital raising, and store acquisition expenses decreased from $20,080 to $3,037 during the year ended December 31, 2024 as compared to the year ended December 31, 2023. These costs primarily consisted of consulting costs in connection with business development, capital raising, and future potential store acquisitions, and expenses related to our third party management platform marketing initiatives. The majority of these expenses are non-recurring and fluctuate based on business development activity during the time period.

Previous wording

Operating income decreased from $3,527,190 during the year ended December 31, 2022 to $3,111,253 during the year ended December 31, 2023, a decrease of 11.8% or $415,937, which was primarily due to increased total expenses.

Current wording

Operating income decreased from $3,111,253 during the year ended December 31, 2023 to $2,894,328 during the year ended December 31, 2024, a decrease of 7.0% or $216,925, which was primarily due to increased total expenses.

Previous wording

Interest expense on loans increased from $780,223 during the year ended December 31, 2022 to $846,406 during the year ended December 31, 2023, an increase of 8.5% or $66,183. This increase was attributable to the unrealized loss on the mark-to-market of the interest rate cap.

Current wording

Interest expense on loans increased from $846,406 during the year ended December 31, 2023 to $880,744 during the year ended December 31, 2024, an increase of 4.1% or $34,338. This increase was attributable to a decrease in cash settlements under the interest rate cap.

Previous wording

Dividend and interest income was $265,046 during the year ended December 31, 2023 as compared to $120,575 during the year ended December 31, 2022. The increase was attributable to the dividends earned on money market mutual fund balances.

Current wording

Dividend and interest income was $276,201 during the year ended December 31, 2024 as compared to $265,046 during the year ended December 31, 2023. The increase was attributable to interest earned on increased cash balances.

Previous wording

The Company recognizes changes in the fair value of its investments in equity securities with readily determinable fair values in net income and, as such, recorded an unrealized gain of $408,876 for the year ended December 31, 2023 compared to an unrealized loss of $1,117,029 during the year ended December 31, 2022.

Current wording

The Company recognizes changes in the fair value of its investments in equity securities with readily determinable fair values in net income and, as such, recorded an unrealized loss of $166,042 for the year ended December 31, 2024 compared to an unrealized gain of $408,876 during the year ended December 31, 2023.

Previous wording

For the year ended December 31, 2023, net income was $2,938,769 or $0.26 per fully diluted share. For the year ended December 31, 2022, net income was $2,057,723 or $0.19 per fully diluted share.

Current wording

For the year ended December 31, 2024, net income was $2,123,743 or $0.19 per fully diluted share. For the year ended December 31, 2023, net income was $2,938,769 or $0.26 per fully diluted share.

Previous wording

Same-store occupancy as of the end of the three months and year ended December 31, 2023 decreased by 30 basis points to 89.3% from 89.6% for the same period in 2022. As of March 15, 2024, occupancy at the Company’s same-store properties was 92.1%.

Current wording

Same-store occupancy as of the end of the three months and year ended December 31, 2024 increased by 360 basis points to 92.9% from 89.3% for the same period in 2023.

Previous wording

Same-store revenues decreased by 2.5% for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and increased by 2.1% for the year ended December 31, 2023 versus the year ended December 31, 2022. Same-store cost of operations increased by 5.3% for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and increased by 9.1% for the twelve months ended December 31, 2023 versus the twelve months ended December 31, 2022. Same-store NOI decreased by 7.1% for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and decreased by 1.7% for the twelve months ended December 31, 2023 versus the twelve months ended December 31, 2022. The decrease in same-store NOI was due primarily to an increase in expenses.

Current wording

Same-store revenues increased by 7.0% for the three months ended December 31, 2024 versus the three months ended December 31, 2023, and increased by 2.9% for the year ended December 31, 2024 versus the year ended December 31, 2023. Same-store cost of operations increased by 0.8% for the three months ended December 31, 2024 versus the three months ended December 31, 2023, and increased by 4.2% for the twelve months ended December 31, 2024 versus the twelve months ended December 31, 2023. Same-store NOI increased by 11.2% for the three months ended December 31, 2024 versus the three months ended December 31, 2023, and increased by 2.1% for the twelve months ended December 31, 2024 versus the twelve months ended December 31, 2023. The increase in same-store NOI was due primarily to an increase in same-store revenues.

Previous wording

For the three and twelve months ended December 31, 2023, revenue decreased 2.5% and increased 2.1%, respectively, as compared to the same periods in 2022. The increase in the twelve months ended December 31, 2023 was attributable to, among other things, increased rental rates, and the results of our proprietary revenue rate management program of raising existing tenant rates. Same store average overall square foot occupancy for all of the Company’s same-stores combined decreased by 30 basis points to 89.3% in the twelve months ended December 31, 2023 from 89.6% in the twelve months ended December 31, 2022. As of March 15, 2024, occupancy at the Company’s same-store properties was 92.1%.

Current wording

For the three and twelve months ended December 31, 2024, revenue increased 7.0% and 2.9%, respectively, as compared to the same periods in 2023. The increase in the twelve months ended December 31, 2024 was attributable to, among other things, increased occupancy rates, and the results of our proprietary revenue rate management program of raising existing tenant rates. Same store average overall square foot occupancy for all of the Company’s same-stores combined increased by 360 basis points to 92.9% in the twelve months ended December 31, 2024 from 89.3% in the twelve months ended December 31, 2023.

Previous wording

As of December 31, 2023, 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 December 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, 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 2024, if any, to be similar to, or slightly greater than, those for the year ended December 31, 2023.

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 2025, if any, to be similar to, those for the year ended December 31, 2024.

Previous wording

Importantly, we continue to refine our proprietary 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 December 31, 2023, our average tenant duration of stay was approximately 3.4 years, up from approximately 3.3 years as of December 31, 2022.

Current wording

Importantly, we continue to refine our proprietary 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 occupancy 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 December 31, 2024, our average tenant duration of stay was approximately 3.4 years, which was about the same as of December 31, 2023.

Previous wording

Same-store cost of operations increased 5.3% or $58,956 for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and increased 9.1% or $379,856 for the twelve months ended December 31, 2023 versus the twelve months ended December 31, 2022. This increase in same-store cost of operations for the twelve months ended December 31, 2023 was due primarily to increased expenses for employment and real estate taxes.

Current wording

Same-store cost of operations increased 0.8% or $9,105 for the three months ended December 31, 2024 versus the three months ended December 31, 2023, and increased 4.2% or $190,957 for the twelve months ended December 31, 2024 versus the twelve months ended December 31, 2023. This increase in same-store cost of operations for the twelve months ended December 31, 2024 was due primarily to increased expenses for employment, repairs and maintenance, and insurance.

Previous wording

Employment. On-site store manager, regional manager and district payroll expense increased 3.7% or $12,218 for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and increased 9.3% or $113,353 for the twelve months ended December 31, 2023 as compared to the same period in 2022. This increase was due primarily to routine employee additions 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 as well as district, regional, and store managers.

Current wording

Employment. On-site store manager, regional manager and district payroll expense decreased 1.6% or $5,325 for the three months ended December 31, 2024 versus the three months ended December 31, 2023, and increased 6.3% or $84,112 for the twelve months ended December 31, 2024 as compared to the same period in 2023. This increase for 2024 versus 2023 was due primarily to routine employee additions and departures, 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 as well as district, regional, and store managers.

Previous wording

Real Estate Property Tax. Store property tax expense increased 10.4% or $43,611 for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and increased 14.5% or $213,519 for the twelve months ended December 31, 2023 as compared to the same period in 2022. The increase in property tax expense during the year ended December 31, 2023 is primarily due to increased property assessment valuations and the loss of our Class 8 tax incentive granted to SSG Dolton LLC. See the section titled “Property Tax Expenses at Dolton, IL” for additional detail. We currently expect same-store property tax expenses to increase during 2024, primarily due to increased property assessment valuations.

Current wording

Real Estate Property Tax. Store property tax expense decreased 14.2% or $65,620 for the three months ended December 31, 2024 versus the three months ended December 31, 2023, and decreased 3.6% or $60,926 for the twelve months ended December 31, 2024 as compared to the same period in 2023. The decrease in property tax expense during the year ended December 31, 2024 is primarily due to property tax relief obtained for our Dolton, IL property in 2024, which was partially offset by our increased property assessment valuations. See the section titled “Property Tax Expenses at Dolton, IL” for additional detail. We currently expect same-store property tax expenses to increase during 2025, primarily due to increased property assessment valuations.

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 10.1% or $19,658 in the three months ended December 31, 2023 as compared to the same period in 2022, and decreased 5.1% or $43,210 in the twelve months ended December 31, 2023 as compared to the same period in 2022. We experienced a decrease in administrative expenses for the year ended December 31, 2023 due primarily to decreased utilities and landscaping expense. Credit card fees increased for the year ended December 31, 2023 due to an increase in rental payments received through credit cards, which is one of the results of our initiatives in building a higher quality overall tenant base. 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 42.7% or $75,033 in the three months ended December 31, 2024 as compared to the same period in 2023, and increased 10.4% or $84,472 in the twelve months ended December 31, 2024 as compared to the same period in 2023. We experienced an increase in administrative expenses for the year ended December 31, 2024 due primarily to increased repairs and maintenance expense. Credit card fees increased for the year ended December 31, 2024 due to an increase in rental payments received through credit cards, which is one of the results of our initiatives in building a higher quality overall tenant base. We currently expect moderate increases in other direct store costs in 2025.

Previous wording

December 31, 2023 as compared to the same period in 2022. We experienced an increase in repairs and maintenance expense for the year ended December 31, 2023 due primarily to inflation and an increased number of one-off repairs in 2023 as compared to 2022.

Current wording

Repairs and maintenance expense increased 201% or $63,464 for the three months ended December 31, 2024 versus the three months ended December 31, 2023, and increased 29.1% or $51,467 for the twelve months ended December 31, 2024 as compared to the same period in 2023. We experienced an increase in repairs and maintenance expense for the year ended December 31, 2024 due primarily to an increased number of one-off repairs in 2024 as compared to 2023.

Previous wording

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. Utility expense decreased 10.2% or $5,731 for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and decreased 4.2% or $11,293 for the twelve months ended December 31, 2023 as compared to the same period in 2022, primarily due to lower energy usage during the three and twelve months ended December 31, 2023 versus the same periods in 2022. 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 in 2024.

Current wording

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. Utility expense increased 9.4% or $4,736 for the three months ended December 31, 2024 versus the three months ended December 31, 2023, and decreased 2.0% or $5,296 for the twelve months ended December 31, 2024 as compared to the same period in 2023, primarily due to lower energy usage during the twelve months ended December 31, 2024 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 resulting in higher net utility costs in 2025.

Previous wording

Landscaping expenses, which include snow removal costs, decreased 19.2% or $5,685 for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and decreased 43.0% or $74,916 in the twelve months ended December 31, 2023 compared to the same period in 2022. The decrease in landscaping expense in the twelve months ended December 31, 2023 versus the same period in 2022 is primarily due to lower snow removal costs. 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 in 2024, excluding snow removal expense, which is primarily weather dependent and unpredictable.

Current wording

Landscaping expenses, which include snow removal costs, decreased 1.0% or $244 for the three months ended December 31, 2024 versus the three months ended December 31, 2023, and increased 12.2% or $12,124 in the twelve months ended December 31, 2024 compared to the same period in 2023. The increase in landscaping expense in the twelve months ended December 31, 2024 versus the same period in 2023 is primarily due to higher snow removal costs. 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 in 2025, 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 decreased 7.8% or $6,862 for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and decreased 14.6% or $43,131 for the twelve months ended December 31, 2023 as compared to the same period in 2022. The decrease in marketing expense in the twelve months ended December 31, 2023 versus the same period in 2022 is primarily due to decreased marketing costs and internet advertising expenses during the year ended 2023. Based upon current trends in move-ins, move-outs, and occupancies, we currently expect marketing expense to increase in 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 increased 5.2% or $4,206 for the three months ended December 31, 2024 versus the three months ended December 31, 2023, and increased 0.2% or $786 for the twelve months ended December 31, 2024 as compared to the same period in 2023. Based upon current trends in move-ins, move-outs, and occupancies, we currently expect marketing expense to increase in 2025.

Previous wording

General. Other direct store costs include general 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 33.4% or $27,522 in the three months ended December 31, 2023 as compared to the same period in 2022, and increased 10.8% or $34,330 in the twelve months ended December 31, 2023 as compared to the same period in 2022, primarily due to increased insurance expense. We currently expect moderate increases in other direct store costs in 2024.

Current wording

General. Other direct store costs include general 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 decreased 2.2% or $2,377 in the three months ended December 31, 2024 as compared to the same period in 2023, and increased 25.7% or $90,352 in the twelve months ended December 31, 2024 as compared to the same period in 2023. The increase in general expense in the twelve months ended December 31, 2024 versus the same period in 2023 is primarily due to increased insurance expense. We currently expect moderate increases in other direct store costs in 2025.

Previous wording

Lien Administration. Lien administration expenses increased 64.9% or $2,126 in the three months ended December 31, 2023 as compared to the same period in 2022, and increased 51.1% or $6,751 in the twelve months ended December 31, 2023 as compared to the same period in 2022.

Current wording

Lien Administration. Lien administration expenses decreased 7.6% or $412 in the three months ended December 31, 2024 as compared to the same period in 2023, and increased 2.7% or $543 in the twelve months ended December 31, 2024 as compared to the same period 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

Unrealized gains/(losses) on the Company’s investment in marketable equity securities for the three and twelve months ended December 31, 2023 were $574,142 and $408,876, respectively, and for the three and twelve months ended December 31, 2022 were $(227,144) and $(1,117,029), respectively. As we continue to acquire and/or redevelop 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 December 31, 2023, our cumulative unrealized gain on marketable equity securities was $2,019,542. There were no realized gains or losses for the twelve months ended December 31, 2023 and December 31, 2022.

Current wording

The change in the unrealized gain on the Company’s investment in marketable equity securities decreased $166,042 and increased $408,876 for the years ended December 31, 2024 and 2023, respectively. As we continue to acquire and/or redevelop 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 December 31, 2024, our cumulative unrealized gain on marketable equity securities was $1,853,500. There were no realized gains or losses for the years ended December 31, 2024 and 2023.