UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2016
or
☐
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 001-12681
GLOBAL SELF STORAGE, INC.
(Exact name of registrant as specified in its charter)
Maryland
(State or other jurisdiction of
incorporation or organization)
13-3926714
(I.R.S. Employer
Identification Number)
Global Self Storage, Inc.
11 Hanover Square, 12th Floor
New York, NY 10005
(212) 785-0900
(Address, including zip code, and telephone number, including area code, of Company’s principal executive offices)
John F. Ramírez, Esq.
Global Self Storage, Inc.
11 Hanover Square, 12th Floor
New York, NY 10005
(Address of principal executive officers, including zip code, and telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.01 par value
Rights to Purchase Series A Participating Preferred Stock
Name of exchange on which registered or to be registered
The Nasdaq Stock Market LLC
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). ☒ Yes ☐ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of this Form 10-
K. ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
☐
Non-accelerated filer
☐ (Do not check if a smaller reporting company)
Accelerated filer
Smaller reporting company
☐
☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
The aggregate market value of the common stock held by non-affiliates of the registrant was $38,944,308 based upon the closing price on the Nasdaq Capital
Market on June 30, 2016, the last business day of the registrant’s most recently completed second fiscal quarter. This calculation does not reflect a determination that
persons whose shares are excluded from the computation are affiliates for any other purpose.
The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of March 22, 2017, was 7,619,469.
Table of Contents
PART I
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
Item 6.
Item 7.
of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Item 9.
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accounting Fees and Services
PART IV
Item 15.
Exhibits, Financial Statement Schedules
Item 16.
Form 10-K Summary
SIGNATURES
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5
8
8
8
9
9
10
10
11
25
25
25
25
26
27
30
33
34
36
38
40
40
STATEMENT ON FORWARD LOOKING INFORMATION
Certain information presented in this annual report may contain “forward-looking statements” within the meaning of the federal
securities laws, including the Private Securities Litigation Reform Act of 1995. Forward looking statements include statements concerning
the Company’s plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs,
plans or intentions relating to acquisitions, and other information that is not historical information. In some cases, forward looking
statements can be identified by terminology such as “believes,” “expects,” “estimates,” “may,” “will,” “should,” “anticipates” or “intends,”
or the negative of such terms or other comparable terminology, or by discussions of strategy. All forward-looking statements by the
Company involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of the Company, which
may cause the Company’s actual results to be materially different from those expressed or implied by such statements. The Company may
also make additional forward looking statements from time to time. All such subsequent forward-looking statements, whether written or
oral, by the Company or on its behalf, are also expressly qualified by these cautionary statements. All forward-looking statements,
including without limitation, the Company’s examination of historical operating trends and estimates of future earnings, are based upon the
Company’s current expectations and various assumptions. The Company’s expectations, beliefs and projections are expressed in good faith
and it believes there is a reasonable basis for them, but there can be no assurance that the Company’s expectations, beliefs and projections
will result or be achieved. All forward looking statements apply only as of the date made. The Company undertakes no obligation to
publicly update or revise forward looking statements which may be made to reflect events or circumstances after the date made or to reflect
the occurrence of unanticipated events. There are a number of risks and uncertainties that could cause our actual results to differ materially
from the forward-looking statements contained in or contemplated by this annual report. Any forward-looking statements should be
considered in light of the risks referenced in our most recent registration statement on Form 10.
There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking
statements contained in or contemplated by this report. Any forward-looking statements should be considered in light of the risks
referenced in our most recent registration statement on Form 10. Such factors include, but are not limited to:
•
•
•
•
•
•
•
•
general risks associated with the ownership and operation of real estate, including changes in demand, risks related
to development of self storage facilities, potential liability for environmental contamination, natural disasters and
adverse changes in tax, real estate and zoning laws and regulations;
risks associated with downturns in the national and local economies in the markets in which we operate, including
risks related to current economic conditions and the economic health of our customers;
the impact of competition from new and existing self storage and commercial facilities and other storage
alternatives;
difficulties in our ability to successfully evaluate, finance, integrate into our existing operations, and manage
acquired and developed facilities;
risks related to our development of new facilities and/or participation in joint ventures;
risks of ongoing litigation and other legal and regulatory actions, which may divert management’s time and
attention, require us to pay damages and expenses or restrict the operation of our business;
the impact of the regulatory environment as well as national, state, and local laws and regulations including, without
limitation, those governing the environment, taxes and our tenant reinsurance business and real estate investment
trusts (“REITs”), and risks related to the impact of new laws and regulations;
risk of increased tax expense associated either with a possible failure by us to qualify as a REIT, or with challenges
to intercompany transactions with our taxable REIT subsidiaries;
3
•
•
•
•
changes in federal or state tax laws related to the taxation of REITs, which could impact our status as a REIT;
security breaches or a failure of our networks, systems or technology could adversely impact our business, customer
and employee relationships;
difficulties in raising capital at a reasonable cost; and
economic uncertainty due to the impact of terrorism or war.
4
Item 1.
Business.
Background
PART I
Global Self Storage, Inc. (the “Company”) is a self-administered and self-managed real estate investment trust (“REIT”), formed as
a Maryland corporation and is focused on the ownership, operation, acquisition, development and redevelopment of self storage facilities
(“stores”). The Company’s stores are located in the Northeast, Mid-Atlantic and Mid-West regions of the United States.
The Company was incorporated on December 12, 1996 under the laws of the state of Maryland, and from that date through the date
of this annual report, the Company has been a corporation duly qualified and in good standing in that state.
From September 1, 1983 to February 7, 1997, the Company was a diversified series of shares of Bull & Bear Incorporated, an open-
end management investment company. On January 23, 1997, the Company (formerly known as Global Income Fund, Inc.) filed a Form N-
8A Notification of Registration pursuant to Section 8(a) of the Investment Company Act of 1940, as amended (the “1940 Act”), registering
the Company as an investment company thereunder, and a Registration Statement on Form N-2 for closed-end investment companies. The
Company commenced operations as a closed-end management investment company on February 7, 1997.
On February 29, 2012, the Company's stockholders approved a proposal to change the Company's business from an investment
company to an operating company that owns, operates, manages, acquires, develops, and redevelops professionally managed self storage
facilities and seeks to qualify as a REIT for federal tax purposes (the "Business Proposal").
The Securities and Exchange Commission’s (“SEC”) order approving the Company’s application to deregister from the 1940 Act
was granted on January 19, 2016. Accordingly, effective January 19, 2016 and in connection with the Business Proposal, the Company
changed its name to Global Self Storage, Inc. from Self Storage Group, Inc., changed its SEC registration to a reporting company under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), from an investment company under the 1940 Act, and listed its
common stock on the Nasdaq Capital Market (“NASDAQ”) under the symbol “SELF”. The Company's fiscal/taxable year ends December
31.
The Company has elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended (the “IRC”). To the extent
the Company continues to qualify as a REIT, it will not be subject to tax, with certain limited exceptions, on the taxable income that is
distributed to its stockholders.
The Company is authorized to issue 19,900,000 shares of $0.01 par value common stock. The Company also has 100,000 shares of
Series A participating preferred stock, $0.01 par value, authorized, of which none has been issued. As of December 31, 2016, 7,619,469
shares of common stock of the Company were outstanding and held by 33 stockholders of record.
On January 28, 2016, the Company announced that its Board of Directors (“Board of Directors” or “Board”) has adopted a
stockholders rights plan (the “Rights Plan”). To implement the Rights Plan, the Board of Directors declared a dividend distribution of one
right for each outstanding share of Company common stock, par value $.01 per share, to holders of record of the shares of common stock at
the close of business on January 29, 2016. Each right entitles the registered holder to purchase from the Company one one-thousandth of a
share of preferred stock, par value $.01 per share. The rights were distributed as a non-taxable dividend and will expire on January 29, 2026.
The rights were evidenced by the underlying Company common stock, and no separate preferred stock purchase rights certificates have
been distributed. The rights to acquire preferred stock are not immediately exercisable and will become exercisable only if a person or
group, other than Exempt Persons (as defined in the Rights Plan agreement), acquires or commences a tender offer for 9.8% or more of the
Company’s common stock. If a person or group, other than an Exempt Person, acquires or commences a tender offer for 9.8% or more of
the Company’s common stock, each holder of a right, except the acquirer, will be entitled, subject to the Company’s right to redeem or
exchange the right, to exercise, at an exercise price of $12, the right to purchase one one-thousandth of a share of
5
the Company’s newly created Series A Participating Preferred Stock, or the number of shares of Company common stock equal to the
holder’s number of rights multiplied by the exercise price and divided by 50% of the market price of the Company’s common stock on the
date of the occurrence of such an event. The Company’s Board of Directors may terminate the Rights Plan at any time or redeem the rights,
for $0.01 per right, at any time before a person acquires 9.8% or more of the Company’s common stock. This Rights Plan replaced the
Company’s stockholders rights plan dated November 25, 2015, which expired on its own terms on March 24, 2016.
Principal Business Activities
As of March 22, 2017, the Company has 24 total employees (13 full-time) and owns, operates and manages, through its wholly
owned subsidiaries, eleven stores located in Connecticut, Illinois, Indiana, New York, Ohio, Pennsylvania, and South Carolina. As of
December 31, 2016, these facilities total 754,095 net leasable square feet and offer 5,625 storage units. In addition to traditional and
climate-controlled units, many of the facilities feature both covered and outside auto/RV/boat storage. The Company invests in stores by
acquiring stores through its wholly owned subsidiaries and operates primarily in one segment: rental operations.
We continue to evaluate and enact a range of new initiatives and opportunities in order to help enable us maximize our stores’
financial performance and stockholder value. Our strategies in seeking to maximize our stores’ financial performance and stockholder value
include, among others, the following:
•
•
•
•
continue to implement and refine our move-in rate management systems in seeking to maximize occupancies and thus
revenue derived from our store portfolio.
continue to implement and refine our existing tenant revenue rate management systems in seeking to maximize revenue per
leased square foot from our store portfolio.
continue to implement and refine our digital, drive-by, and referral marketing programs in seeking to attract more and
higher quality (e.g. credit card paying) customers to our stores at a lower net cost.
continue to pursue the acquisition of single stores and small portfolios that we believe can add stockholder value.
Our stores are generally located in densely populated and high traffic areas near major roads and highways. All of our stores display
prominent road signage and most feature LED marquee boards describing the store features and move-in rent specials. Our stores are
generally located in areas with strict zoning laws and attentive planning boards which make it difficult for our competition to develop new
facilities near ours. As we evaluate potential stores, we seek stores in areas with these high barriers to entry.
Most of our stores compete with other well-managed and well-located competitors and we are subject to general economic
conditions, particularly those that affect the spending habits of consumers and moving trends. Because we operate in competitive markets,
often where self storage consumers have multiple stores from which to choose, such competition has affected and is likely to continue to
affect our store results. We experience seasonal fluctuations in occupancy levels as well, with occupancy levels generally higher in the
summer months due to increased moving activity. We believe that our centralized information networks, national telephone and online
reservation system, the brand name “Global Self Storage,” and our economies of scale help enable us to meet such challenges effectively.
In seeking to maximize the performance of our stores, we employ our proprietary revenue rate management systems which help us
to analyze, adjust, and set our move-in and existing tenant rental rates on a real-time basis across our portfolio. Among other technologies,
we employ internet data scraping of our local competitors’ move-in rental rates to help enable us to proactively respond and take advantage
of changing market conditions across our portfolio of stores. Our operating results typically depend significantly on our ability to manage
our storage units’ rental rates, to respond in a timely manner to prospective tenant inquiries, and to lease available storage units, and on the
ability of our tenants to make required storage unit rental payments.
We have registered the trademark and developed the brand "Global Self Storage." We have developed a corporate logo and have
incorporated it on all of our on-site signage, advertising and other marketing materials. This
6
branding process has included the creation and development of the www.GlobalSelfStorage.us website, whereby prospective customers can
click through and read and learn about the features of any of our self storage facilities in their various locations. We continue to develop the
Global Self Storage internet presence through advertising and search engine optimization. We solicit tenant reviews for posting to the
“Testimonials” section of our website and encourage others to view these reviews. We have found that a reliable source of new tenants is
through referrals of current tenants. Existing self storage customers may also pay their storage unit rent on-line through
www.GlobalSelfStorage.us.
Attracting high quality, long-term tenants is a top priority for the Company and we strongly believe in tenant quality over tenant
quantity. In our marketing efforts, we have seen success in our referral marketing program, through which our tenants may recommend
Global Self Storage to their family, friends, and colleagues. We also believe our store managers’ attention to detail – maintaining security,
cleanliness, and attentive customer service – is essential to attracting high quality tenants.
Tenant leases at all of our stores are “month-to-month” leases. We seek to deliver at least 30 days’ written notice of any rental rate
change. Lease rates at each store may be set monthly, semi-annually, annually, or at any other time on a case-by-case basis as determined in
the discretion of management. Tenants may be assessed late, administrative, and/or other fees. To date, none of the Company’s stores have
experienced any material delinquencies.
Each of our stores features a rental and payment center kiosk available 24 hours a day, seven days a week, where prospective tenants
can rent a unit and current tenants can pay their rent. All of our stores have on-site property managers who are committed to delivering the
finest customer service. Our customer call center handles telephone inquiries from current and prospective tenants whenever our store
managers are not available. They can respond to questions about our stores and storage features, and book reservations. We seek to deliver
convenience and high quality customer service to our tenants, as well as maintain clean and secure stores at all times.
Please refer to Item 7 herein for further discussion of, among other things, competitive business conditions, the Company’s
competitive position in the self storage industry, methods of competition, and the effect of existing or probable government regulations on
the Company’s business. The public may read and copy any materials the Company has filed with the SEC at the SEC's Public Reference
Room at 100 F Street, NE., Washington, DC 20549, on official business days during the hours of 10 a.m. to 3 p.m. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site at
http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the SEC. Additional information about the Company, not contained in this form or made a part hereof, may be found at
www.GlobalSelfStorage.us.
Acquisitions and Financing
In our store acquisition strategy, we will seek to continue to focus on secondary and tertiary cities in the Mid-West, Northeast and
Mid-Atlantic parts of the country where we believe there is relatively less self storage space per capita available, generally resulting in
greater demand for available self storage square feet; where new self storage development and permitting through the local planning and
zoning boards is typically more difficult to secure thus creating barriers to entry for new self storage competition; and where local new
supply through new development is generally less threatening.
We continue to review available acquisition opportunities with the awareness that, should interest rates increase, resulting store
capitalization rates may also increase and store prices may begin to decrease. We will seek to continue to employ our strict acquisition
underwriting standards and remain a disciplined buyer and only execute acquisitions where we believe that our management techniques and
innovations can strengthen our portfolio and increase stockholder value.
7
The Company currently intends to use cash, proceeds from mortgage financing, and/or proceeds from sales of its remaining
portfolio of investment securities to acquire, re-develop, and/or operate additional and existing stores. For future acquisitions, the
Company may use various financing and capital raising alternatives including, but not limited to, debt and/or equity offerings, credit
facilities, mortgage financing, and joint ventures with third parties.
Item 1A.
Risk Factors.
Not applicable.
Item 1B.
Unresolved Staff Comments.
None.
Item 2.
Properties.
GLOBAL SELF STORAGE STORES
(As of December 31, 2016)
Stores(1)
Address
Year Store
Opened / Opened
Number
of Units
Net Leasable
Square Feet
December 31, 2016
Square Foot
Occupancy %
December 31, 2015
Square Foot
Occupancy %
SSG BOLINGBROOK LLC
SSG DOLTON LLC
SSG MERRILLVILLE LLC
SSG ROCHESTER LLC
SSG SADSBURY LLC
SSG SUMMERVILLE I LLC
SSG SUMMERVILLE II LLC
TOTAL/AVERAGE SAME
STORES
SSG FISHERS LLC
SSG LIMA LLC
TUXIS SELF STORAGE I LLC
TUXIS SELF STORAGE II LLC
TOTAL/AVERAGE NON-
SAME STORES
296 North Weber Road,
Bolingbrook, IL 60440
14900 Woodlawn Avenue,
Dolton, IL 60419
6590 Broadway,
Merrillville, IN 46410
2255 Buffalo Road,
Rochester, NY 14624
21 Aim Boulevard,
Sadsburyville, PA 19369
1713 Old Trolley Road,
Summerville, SC 29485
900 North Gum Street,
Summerville, SC 29483
13942 East 96th Street,
McCordsville, IN 46055
1910 West Robb Avenue,
Lima, OH 60419
6 Heritage Park Road,
Clinton, CT 06413
3814 Route 44, Millbrook, NY
12545
1997 / 2013
2007 / 2013
2005 / 2013
2010 / 2012
2006 / 2012
1990 / 2013
1997 / 2013
2007 / 2016
1996 / 2016
1996 / 2016
2008 / 2016
801
649
508
650
699
557
254
110,600
62.2 %
86,725
71,720
68,017
79,004
72,700
41,608
94.8 %
91.3 %
92.8 %
86.9 %
89.9 %
87.6 %
93.9 %
93.2 %
95.6 %
87.1 %
80.2 %
77.9 %
88.2 %
4,118
530,374
84.9 %
87.9 %
419
761
185
142
81,471
97,801
31,059
13,391
85.9 %
94.9 %
80.8 %
88.9 %
77.3 %
97.6 %
86.4 %
88.4 %
1,507
223,722
89.3 %
87.8 %
TOTAL/AVERAGE ALL
STORES
(1) Each store is directly owned by the Company’s wholly owned subsidiary listed in the table.
5,625
754,096
86.2 %
87.9 %
During the second quarter of 2015, SSG Bolingbrook LLC eliminated 98 parking spaces (32,700 square feet) to accommodate its
new five building expansion construction project. This expansion project was completed during mid-November 2016 and added 304
climate-controlled and traditional storage units totaling 44,260 leasable square feet to the facility bringing the total to 801 storage units and
110,600 leasable square feet. Same-store occupancy includes the impact from expansion and redevelopment projects at our stores. As SSG
Bolingbrook LLC’s newly-
8
constructed leasable square feet were added last November, its area occupancy dropped from mid-90% to approximately 60%. Also during
2015, upon completion of its expansion project, SSG Sadsbury LLC added 219 climate-controlled storage units comprising 16,756 leasable
square feet. Certain stores’ leasable square feet in the chart above includes outside auto/RV/boat storage space: approximately 13,000
square feet at SSG Sadsbury LLC; 11,300 square feet at SSG Bolingbrook LLC; 9,900 square feet at SSG Dolton LLC; 11,170 square feet
at SSG Merrillville LLC; 5,300 square feet at SSG Summerville II LLC; and 9,270 square feet at Tuxis Self Storage I LLC [Clinton, CT].
For SSG Lima LLC, included is approximately 12,683 square feet of non-storage commercial and student housing space. Approximately
34% of our total available units are climate-controlled, 58% are traditional, and 8% are parking.
Item 3.
Legal Proceedings.
From time to time, the Company or its subsidiaries may be named in legal actions and proceedings. These actions may seek
substantial or indeterminate compensatory as well as punitive damages or injunctive relief. We are also subject to governmental or
regulatory examinations or investigations. Examinations or investigations can result in adverse judgments, settlements, fines, injunctions,
restitutions or other relief. For any such matters, the Company will seek to include in its financial statements the necessary provisions for
losses that it believes are probable and estimable. Furthermore, the Company will seek to evaluate whether there exist losses which may be
reasonably possible and, if material, make the necessary disclosures. The Company currently does not have any material pending legal
proceedings to which the Company or any of its subsidiaries is a party or of which any of their property is the subject.
Item 4.
Mine Safety Disclosures.
Not applicable.
9
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
The Company’s shares of common stock are listed on NASDAQ under the ticker symbol SELF. The following table presents the
high and low sales prices for shares of the Company’s common stock for each full quarterly period within the two most recent fiscal years.
2015
2016
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
High
Low High
Low High
Low High
$
$
3.77 $
4.93 $
3.45 $
3.73 $
3.66 $
5.64 $
3.43 $
4.59 $
3.92 $
5.85 $
3.48 $
5.26
3.98 $
5.26
Low
3.56
4.54
As of March 23, 2017, there were approximately 2,850 record and beneficial holders of the Company’s common stock.
Dividends
Holders of shares of the Company’s common stock are entitled to receive distributions when declared by our Board of Directors out
of any assets legally available for that purpose. As a REIT, we are required to distribute at least 90% of our “REIT taxable income,” which
is generally equivalent to our net taxable ordinary income, determined without regard to the deduction for dividends paid to our
stockholders annually in order to maintain our REIT qualification for U.S. federal income tax purposes. The following table presents the
amount of each quarterly dividend paid on the Company’s common stock for the two most recent fiscal years.
2015
2016
Item 6.
Selected Financial Data.
Not applicable.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
0.065
0.065
0.065 $
0.065 $
0.065 $
0.065 $
0.065 $
0.065 $
$
$
10
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
CAUTIONARY LANGUAGE
The following discussion and analysis should be read in conjunction with our selected consolidated historical financial data together
with the consolidated pro forma financial data and historical financial statements and related notes thereto included elsewhere in this annual
report. We make statements in this section that may be forward looking statements within the meaning of the federal securities laws. For a
complete discussion of forward looking statements, see the section in this annual report entitled “Statement on Forward Looking
Information.”
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results of operations are based on our condensed 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.
In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require our
judgment in its application. There are areas in which our judgment in selecting among available alternatives would not produce a materially
different result, but there are some areas in which our judgment in selecting among available alternatives would produce a materially
different result. See the notes to the condensed consolidated financial statements that contain additional information regarding our
accounting policies and other disclosures.
Management’s Discussion and Analysis Overview
The Company is a self-administered and self-managed REIT focused on the ownership, operation, acquisition, development and
redevelopment of self storage facilities in the United States. Our stores are designed to offer affordable, easily accessible and secure storage
space for residential and commercial customers. The Company currently owns and operates, through its wholly owned subsidiaries, eleven
stores located in Connecticut, Illinois, Indiana, New York, Ohio, Pennsylvania, and South Carolina. As previously reported in our press
release on January 19, 2016, on that day, the Company changed its name to Global Self Storage, Inc. from Self Storage Group, Inc.,
changed its SEC registration from an investment company to an operating company reporting under the Exchange Act, and uplisted to
NASDAQ.
Our store operations generated most of our net income for all periods presented herein. Accordingly, a significant portion of
management’s time is devoted to seeking to maximize cash flows from our existing stores, as well as seeking investments in additional
stores. The Company expects to continue to earn a majority of its gross income from its store operations as its current store operations
continue to develop and as it makes additional store acquisitions. Over time, the Company expects to divest its remaining portfolio of
investment securities and use the proceeds to acquire and operate additional stores. The Company expects its income from investment
securities to continue to decrease as it continues to divest its holdings of investment securities.
Financial Condition and Results of Operations
On June 24, 2016, certain wholly owned subsidiaries (“Secured Subsidiaries”) of the Company entered into a loan agreement and
certain other related agreements (collectively, the “Loan Agreement”) between the Secured Subsidiaries and Insurance Strategy Funding
IV, LLC (the “Lender”). Under the Loan Agreement, the Secured Subsidiaries are borrowing from Lender in the principal amount of $20
million pursuant to a promissory note (the “Promissory Note”). The Promissory Note bears an interest rate equal to 4.192% per annum and
is due to mature on July 1, 2036. Pursuant to a security agreement (the “Security Agreement”), the obligations under the Loan
11
Agreement are secured by certain real estate assets owned by the Secured Subsidiaries. J.P. Morgan Investment Management, Inc. acted as
Special Purpose Vehicle Agent of the Lender. The Company entered into a non-recourse guaranty on June 24, 2016 (the “Guaranty,” and
together with the Loan Agreement, the Promissory Note and the Security Agre ement, the “Loan Documents”) to guarantee the payment to
Lender of certain obligations of the Secured Subsidiaries under the Loan Agreement. The Loan Documents require the Secured
Subsidiaries and the Company to comply with certain covenants, including, among others, a minimum net worth test and other customary
covenants. The Lender may accelerate amounts outstanding under the Loan Documents upon the occurrence of an Event of Default (as
defined in the Loan Agreement) including, but not limited to, the fail ure to pay amounts due or commencement of bankruptcy proceedings.
The Company and the Secured Subsidiaries paid customary fees and expenses in connection with their entry into the Loan Documents.
There is no material relationship between the Company, its Secured Subsidiaries, or its affiliates and the Lender, other than in respect of
the Loan Documents. The foregoing description is qualified in its entirety by the full terms and conditions of the Loan Documents, filed as
Exhibits 10.1, 10.2, 10.3 and 10.4 to the Current Report on Form 8-K filed on June 30, 2016. We intend to use the proceeds of such debt
financing primarily in connection with future potential store acquisitions and development.
As of December 31, 2016, we had capital resources totaling approximately $4.4 million comprised of $2.9 million of cash and cash
equivalents and $1.5 million of marketable securities. 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.
We have been actively reviewing a number of store and store portfolio acquisition candidates and have been working to further
develop and expand our current stores. On May 9, 2016, one of our wholly owned subsidiaries entered into an agreement with Gray Eagle
Development, LLP (the “Indiana Seller”) to acquire a store located in Fishers, Indiana (the “Indiana Property”) for the sum of
$7,700,000. On September 26, 2016, the Company completed the acquisition of the Indiana Property for approximately $7,700,000 in
cash.
On June 27, 2016, another one of our wholly owned subsidiaries entered into an agreement with West Robb Ave., LLC, Wall &
Ceiling Systems, Inc. and Victoria L. Strickland (collectively, the “Ohio Seller”) to acquire a store located in Lima, Ohio (the “Ohio
Property”) for the sum of $5,300,000. On August 29, 2016, the Company completed the acquisition of the Ohio Property for $5,300,000 in
cash.
Additionally, on November 23, 2016, the Company entered into an agreement (the “Purchase Agreement”) with Tuxis, a Company
affiliate, to acquire all of the membership interests of each of Tuxis Self Storage I LLC (“TSS I”), Tuxis Self Storage II LLC (“TSS II”),
and Tuxis Real Estate II LLC (“TRE II”), each a wholly owned Tuxis subsidiary (collectively, the “Tuxis Subsidiaries”), for the aggregate
purchase price of $7,800,000 (the “Purchase Price”), comprised of $5,925,000 payable in cash, $975,000 in shares of the Company’s
common stock, and, contingent upon the satisfaction of certain conditions described in the Purchase Agreement, an additional $900,000
cash payment. TSS I is the owner and operator of a 185 unit, 31,059 square foot store located in Clinton, Connecticut. TSS II is the owner
and operator of a 142 unit, 13,391 square foot store located in Millbrook, New York. TRE II owns a 1,875 square foot commercial property
located in Millbrook, New York which adjoins the property held by TSS II. TSS II and TRE II together have applied to the local
municipality for permission to re-develop the parcels and properties to expand TSS II’s existing store.
On December 30, 2016, the Company completed the acquisition of the Tuxis Subsidiaries for $5,925,000 in cash and 202,703
unregistered and restricted shares of the Company’s common stock. Upon the satisfaction of certain conditions described in the Purchase
Agreement in connection with expanding TSS II’s existing store, an additional $900,000 cash payment is expected to be made by the
Company to Tuxis.
Revenues
Rental income increased from $4,141,472 during 2015 to $4,867,414 during 2016, an increase of $725,942, or 17.53%. The increase
in same-store revenue was due primarily to an increase in rental and occupancy rates. Realized annual rent per square foot on our same-
store portfolio increased 4.2% as a result of higher asking rates for new and existing customers during 2016 as compared to 2015. The
remaining increase was primarily attributable to the additional income from the stores acquired in 2016, included in our non-same store
portfolio.
12
Other store related income consists of late fees, administrative charges, customer insurance fees, sales of storage supplies, and other
ancillary revenues. Other store related income increased from $297,825 in 2015 to $377,959 in 2016, an increase of $80,134, or 21.2%. This
increase was primarily attributable to increased fee revenue and insurance fees on the stores acquired in 2016 and a smaller increase in
same-store property related income mainly attributable to increased insurance participation and higher average occupancy.
Operating Expenses
Store operating expenses increased from $1,793,319 in 2015 to $2,155,492 in 2016, an increase of $362,173, or 20.2%, which was
primarily attributable to the increased expenses associated with newly acquired stores.
Depreciation and amortization increased from $635,226 in 2015 to $813,796 in 2016, an increase of $178,570, or 28.1%. This
increase was primarily attributable to depreciation and amortization expense related to the 2016 acquisitions.
General and administrative expenses increased from $1,191,768 in 2015 to $1,406,441 in 2016, an increase of $214,673, or 18%.
The change was primarily attributable to $264,254 of increased legal, consultant, and payroll expenses resulting from additional and new
expenses incurred to support our growth.
Business development and store acquisition related costs increased from $0 during 2015 to $449,738 during 2016. Business
development and store acquisition-related costs are non-recurring and fluctuate based on periodic investment activity.
Other income (expense)
Interest expense on loans increased from $0 during the year ended December 31, 2015 to $456,719 during the year ended December
31, 2016. The increase is primarily attributable to a higher amount of outstanding debt during 2016 as compared to 2015. The debt balance
during the year ended December 31, 2016 increased to $19,600,000 from $0 for the same period during 2015 as a result of the Loan
Agreement. For the year ended December 31, 2016, realized gain from the sale of investment securities was $602,428 and dividend and
interest income was $172,724.
Net income (loss)
For the period January 19, 2016 to December 31, 2016, the net income was $384,135 or $0.05 per share. For the period January 1,
2016 to January 18, 2016, the Company was a registered investment company and applied the accounting guidance in ASC 946.
Non-GAAP Measures
Funds from Operations (“FFO”) and FFO per share are non-GAAP measures defined by the National Association of Real Estate
Investment Trusts (“NAREIT”) and are considered helpful measures of REIT performance by REITs and many REIT analysts. NAREIT
defines FFO as a REIT’s net income, excluding gains or losses from sales of property, and adding back real estate depreciation and
amortization. FFO and FFO per share are not a substitute for net income or earnings per share. FFO is not a substitute for GAAP net cash
flow in evaluating our liquidity or ability to pay dividends, because it excludes financing activities presented on our statements of cash
flows. In addition, other REITs may compute these measures differently, so comparisons among REITs may not be helpful. However, the
Company believes that to further understand the performance of its stores, FFO should be considered along with the net income and cash
flows reported in accordance with GAAP and as presented in the Company’s financial statements.
Adjusted FFO (“AFFO”) represents FFO excluding the effects of business development and acquisition related costs and non-
recurring items, which we believe are not indicative of the Company’s operating results. We present AFFO because we believe it is a
helpful measure in understanding our results of operations insofar as we believe that the items noted above that are included in FFO, but
excluded from AFFO, are not indicative of our ongoing operating results. We also believe that the analyst community considers our AFFO
(or similar measures
13
using different terminology) when evaluating us. Because other REITs or real estate companies may not compute AFFO in the same
manner as we do, and may use different terminology, our computation of AFFO may not be comparable to AFFO reported by other REITs
or real estate companies.
We believe net operating income or “NOI” is a meaningful measure of operating performance because we utilize NOI in making
decisions with respect to, among other things, capital allocations, determining current store values, evaluating store performance, and in
comparing period-to-period and market-to-market store operating results. In addition, we believe the investment community utilizes NOI in
determining operating performance and real estate values, and does not consider depreciation expense because it is based upon historical
cost. NOI is defined as net store earnings before general and administrative expenses, interest, taxes, depreciation, and amortization.
NOI is not a substitute for net income, net operating cash flow, or other related GAAP financial measures, in evaluating our
operating results.
GLOBAL SELF STORAGE STORES
(As of December 31, 2016)
Property
Address
Year Store
Opened / Opened
Number
of Units
Net Leasable
Square Feet
December 31,
2016
Square Foot
Occupancy %
December 31,
2015
Square Foot
Occupancy %
SSG BOLINGBROOK LLC
SSG DOLTON LLC
SSG MERRILLVILLE LLC
SSG ROCHESTER LLC
SSG SADSBURY LLC
SSG SUMMERVILLE I LLC
SSG SUMMERVILLE II LLC
TOTAL/AVERAGE SAME
STORES
SSG FISHERS LLC
SSG LIMA LLC
TUXIS SELF STORAGE I LLC
TUXIS SELF STORAGE II LLC
TOTAL/AVERAGE NON-
SAME STORES
296 North Weber Road,
Bolingbrook, IL 60440
14900 Woodlawn Avenue,
Dolton, IL 60419
6590 Broadway,
Merrillville, IN 46410
2255 Buffalo Road,
Rochester, NY 14624
21 Aim Boulevard,
Sadsburyville, PA 19369
1713 Old Trolley Road,
Summerville, SC 29485
900 North Gum Street,
Summerville, SC 29483
13942 East 96th Street,
McCordsville, IN 46055
1910 West Robb Avenue,
Lima, OH 60419
6 Heritage Park Road,
Clinton, CT 06413
3814 Route 44, Millbrook, NY
12545
1997 / 2013
2007 / 2013
2005 / 2013
2010 / 2012
2006 / 2012
1990 / 2013
1997 / 2013
2007 / 2016
1996 / 2016
1996 / 2016
2008 / 2016
801
649
508
650
699
557
254
110,600
62.2 %
93.9 %
86,725
71,720
68,017
79,004
72,700
41,608
94.8 %
93.2 %
91.3 %
95.6 %
92.8 %
87.1 %
86.9 %
80.2 %
89.9 %
77.9 %
87.6 %
88.2 %
4,118
530,374
84.9 %
87.9 %
419
761
185
142
81,471
97,801
31,059
13,391
85.9 %
77.3 %
94.9 %
97.6 %
80.8 %
86.4 %
88.9 %
88.4 %
1,507
223,722
89.3 %
87.8 %
TOTAL/AVERAGE ALL
STORES
(1) Each store is directly owned by the Company’s wholly owned subsidiary listed in the table.
5,625
754,096
86.2 %
87.9 %
During the second quarter of 2015, SSG Bolingbrook LLC eliminated 98 parking spaces (32,700 square feet) to accommodate its
new five building expansion construction project. This expansion project was completed during mid-November 2016 and added 304
climate-controlled and traditional storage units totaling 44,260 leasable square feet to the facility bringing the total to 801 storage units and
110,600 leasable square feet. Same-store occupancy includes the impact from expansion and redevelopment projects at our stores. As SSG
Bolingbrook LLC’s newly-
14
constructed leasable square feet were added last November, its area occupancy dropped from mid-90% to approximately 60%. Also during
2015, upon completion of its expansion project, SSG Sadsbury LLC added 219 climate-controlled storage units comprising 16,756 leasable
square feet. Certain stores’ leasable square feet in the chart above includes outside auto/RV/boat storage space: approximately 13,000
square feet at SSG Sadsbury LLC; 11,300 square feet at SSG Bolingbrook LLC; 9,900 square feet at SSG Dolton LLC; 11,170 square feet
at SSG Merrillville LLC; 5,300 square feet at SSG Summerville II LLC; and 9,270 square feet at Tuxis Self Storage I LLC. For SSG Lima
LLC, included is approximately 12,683 square feet of non-storage commercial and student housing space. Approximately 34% of our total
available units are climate-controlled, 58% are traditional, and 8% are parking.
Same-Store Self Storage Operations
We consider our same-store portfolio to consist of only those stores owned and operated on a stabilized basis at the beginning and at
the end of the applicable periods presented. We consider a store to be stabilized once it has achieved an occupancy rate that we believe,
based on our assessment of market-specific data, is representative of similar self-storage assets in the applicable market for a full year
measured as of the most recent January 1 and has not been significantly damaged by natural disaster or undergone significant renovation.
Same-store occupancy includes the impact from expansion projects at those stores. We believe that same-store results are useful to
investors in evaluating our performance because they provide information relating to changes in store-level operating performance without
taking into account the effects of acquisitions, dispositions or new ground-up developments. At December 31, 2016, we owned 7 same-
store facilities and 4 non-same-store facilities. The Company believes that by providing same-store results from a stabilized pool of stores,
with accompanying operating metrics including, but not limited to, variances in occupancy, rental revenue, operating expenses, NOI, etc.,
stockholders and potential investors are able to evaluate operating performance without the effects of non-stabilized occupancy levels, rent
levels, expense levels, acquisitions or completed developments. Same-store results should not be used as a basis for future same-store
performance or for the performance of the Company’s stores as a whole.
Same-store occupancy for the three months and year ended December 31, 2016 decreased by 3.0% to 84.9% from 87.9% for the
same period in 2015. This includes the impact from the Bolingbrook expansion project completed during the quarter. Excluding the
additional vacancy created in this store, ending occupancy would have been 90.6%, an increase of 2.7% compared to the same period in
2015.
We grew our top-line results by increasing same-store revenues by 10.7% for the three months ended December 31, 2016 versus the
three months ended December 31, 2015, and by 8.4% for the year ended December 31, 2016 versus the year ended December 31, 2015.
Same-store cost of operations increased by 12.0% for the three months ended December 31, 2016 versus the three months ended December
31, 2015, and by 9.3% for the twelve months ended December 31, 2016 versus the twelve months ended December 31, 2015. Same-store
NOI increased by 9.9% for the three months ended December 31, 2016 versus the three months ended December 31, 2015, and by 7.8% for
the twelve months ended December 31, 2016 versus the twelve months ended December 31, 2015. General and administrative expenses
increased by 13.2% for the three months ended December 31, 2016 versus the three months ended December 31, 2015, and by 18.0% for
the period January 19, 2016 to December 31, 2016 versus the twelve months ended December 31, 2015. The change is primarily
attributable to $264,254 of increased legal, accounting, compliance, NASDAQ listing fees, and investor relations and capital market
consulting expenses. Going forward, although we currently expect some general and administrative expense reductions associated with our
discontinued registration as an investment company, we are incurring and expect to incur a number of new expenses related to, among
other things, the Company’s new reporting and regulatory requirements.
We believe that our results were driven by, among other things, our internet and digital marketing initiatives which helped our
overall average occupancy maintain in the mid-to-high 80% range as of December 31, 2016. Also, contributing to our results were our
customer service efforts which we believe were essential in building local brand loyalty resulting in powerful referral and word-of-mouth
market demand for our storage units and services. Another significant contributing factor to our results was our revenue rate management
program which helped increase our total annualized revenue per leased square foot by 5.0% for the three months ended December 31, 2016
versus the three months ended December 31, 2015, and by 2.8% for the twelve months ended December 31, 2016 versus the twelve months
ended December 31, 2015.
15
These results are summarized as follows:
Revenues
Cost of operations
Net operating income
SAME - STORE PROPERTIES
YTD 2016
$ 4,812,318
YTD 2015
$ 4,439,297
Variance
$
373,021
$ 1,960,438
$ 1,793,319
$
167,119
$ 2,851,880
$ 2,645,978
$
205,902
Depreciation and amortization
$
651,680
$
635,226
$
16,454
Net leasable square footage at period end
530,374
485,578
44,796
Net leased square footage at period end
450,131
427,064
23,067
% Change
8.4 %
9.3 %
7.8 %
2.6 %
9.2 %
5.4 %
Overall square foot occupancy at period end
84.9 %
87.9 %
-3.1 %
-3.5 %
Total annualized revenue per leased square foot
$
10.69
$
10.39
$
0.30
Number of leased storage units
3,418
3,220
198
Revenues
Cost of operations
Net operating income
SAME - STORE PROPERTIES
Q4 2016
$ 1,230,266
Q4 2015
$ 1,110,983
Variance
$
119,283
$
500,799
$
447,015
$
53,784
$
729,467
$
663,968
$
65,499
Depreciation and amortization
$
168,837
$
161,601
$
7,236
Net leasable square footage at period end
530,374
485,578
44,796
Net leased square footage at period end
450,131
427,064
23,067
2.8 %
6.1 %
% Change
10.7 %
12.0 %
9.9 %
4.5 %
9.2 %
5.4 %
Overall square foot occupancy at period end
84.9 %
87.9 %
-3.0 %
-3.4 %
Total annualized revenue per leased square foot
$
10.93
$
10.41
$
0.52
Number of leased storage units
3,418
3,220
198
5.0 %
6.1 %
16
Analysis of Same-Store Revenue
For the three months ended December 31, 2016, the 10.7% revenue increase was due primarily to a 4.9% increase in total
annualized revenue per leased square foot, a 5.4% increase in net leased square footage. For the twelve months ended December 31, 2016,
the 8.4% revenue increase was due primarily to a 4.5% increase in total annualized revenue per leased square foot and a 5.4% increase in
net leased square footage. The increase in total annualized revenue per leased square foot was due primarily to annual existing tenant rent
increases, an increase in available climate-controlled leasable square feet compared to available leasable parking square feet, and, to a lesser
extent, increased move-in rental rates and decreased move-in rent “specials” discounting. Same store average overall square foot occupancy
for all of the Company’s stores combined decreased to 84.9% in the twelve months ended December 31, 2016 from 87.9% in the twelve
months ended December 31, 2015 primarily due to the vacancy added by the addition of the 44,260 leasable square feet expansion at our
Bolingbrook store during November 2016.
We believe that high occupancies help maximize our rental income. We seek to maintain an average square foot occupancy level at
about 90% by regularly adjusting the rental rates and promotions offered to attract new tenants as well as adjusting our online marketing
efforts in order to generate sufficient move-in volume to replace tenants that vacate. Demand fluctuates due to various local and regional
factors, including the overall economy. Demand is generally higher in the summer months than in the winter months and, as a result, rental
rates charged to new tenants are typically higher in the summer months than in the winter months.
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 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 in 2017 to be slightly less than the prior year.
We believe that the current trends in move-in, move-out, in place contractual rents, and occupancy levels are consistent with our
current expectation of continued revenue growth. However, such trends, when viewed in the short-term, are volatile and not necessarily
predictive of our revenues going forward because they may be subject to many short-term factors. Such factors include, among others,
initial move-in rates, seasonal factors, the unit size and geographical mix of the specific tenants moving in or moving out, the length of stay
of the tenants moving in or moving out, changes in our pricing strategies, and the degree and timing of rate increases previously passed to
existing tenants.
Importantly, we continue to refine our ongoing revenue management program which includes regular internet data scraping of local
competitors’ prices. We do this in order to maintain our competitive market price advantage for our various sized storage units at our
stores. This program helps us 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.
Currently, our average tenant duration of stay is approximately three years, up from approximately two years for the same period in 2015.
Analysis of Same-Store Cost of Operations
Same-store cost of operations increased 12.0% or $53,784 for the three months ended December 31, 2016 versus the three months
ended December 31, 2015, and increased 9.3% or $167,119 for the twelve months ended December 31, 2016 versus the twelve months
ended December 31, 2015. This increase in same-store cost of operations was due primarily to increased store level employment costs, store
property tax expense, repair and maintenance, and marketing expense, which were partially offset by decreases in professional, utilities,
administrative, and lien administration costs.
17
On-site store manager, regional manager and district payroll expense increased 12.0% or $15,585 for the three months ended
December 31, 2016 versus the three months ended December 31, 2015, and increased 14.5% or $69,251 for the twelve months ended
December 31, 2016 as compared to the same period in 2015. This increase was due primarily to an increase in the number of store manager,
regional and district manager level employees, wage increases, and higher employee health plan expenses. 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 and Regional Managers.
Store property tax expense increased 0.03% or $51 for the three months ended December 31, 2016 versus the three months ended
December 31, 2015, and increased 5.1% or $28,818 for the twelve months ended December 31, 2016 as compared to the same period in
2015, due primarily to higher assessed store property values and tax rates, in particular for our Sadsburyville, PA store. We currently expect
store property tax expense growth of approximately the same amount in 2017.
Repairs and maintenance expense increased 109.6% or $25,417 for the three months ended December 31, 2016 versus the three
months ended December 31, 2015, and increased 35.6% or $35,443 for the twelve months ended December 31, 2016 as compared to the
same period in 2015 due primarily to performing certain mandatory repairs as part of our mortgage loan covenants and requirements in
accordance with the Loan Documents. As of December 31, 2016, the majority of these repairs have been completed. Also contributing to
the increase in repair and maintenance expense is our ongoing LED light replacement program expenses in 2016 as compared to 2015. We
anticipate continued focus on our LED light replacement program throughout 2017. At our stores fully converted to LED lighting, we have
realized utilities expense savings year-over-year of approximately 10% to 40%, depending on the store, due to lower kilowatt per hour
usage.
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 aforementioned ongoing LED light replacement program at all of our stores which has already resulted in lower electricity
usage. Utility expense increased 21.7% or $5,068 for the three months ended December 31, 2016 versus the three months ended December
31, 2015, and decreased 4.8% or $6,233 for the twelve months ended December 31, 2016 as compared to the same period in 2015 primarily
due to 2016’s milder winter in most of our stores’ areas and the benefit of lower electricity usage due to our LED light replacement
program. 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 net lower utility costs in 2017.
Landscaping expenses, which include snow removal costs, increased 37.9% or $5,726 for the three months ended December 31,
2016 versus the three months ended December 31, 2015, and increased 6.3% or $4,697 in the twelve months ended December 31, 2016
compared to the same period in 2015. 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 2017, excluding snow removal expense, which is primarily weather
dependent and unpredictable.
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 15.9% or $6,198 for the
three months ended December 31, 2016 versus the three months ended December 31, 2015, and increased 28.8% or $48,847 for the twelve
months ended December 31, 2016 as compared to the same period in 2015 primarily due to the increased internet advertising expenses and
the one-time costs associated with the production and addition of size estimator and locations videos to our stores’ website,
www.GlobalSelfStorage.us. Based upon current trends in move-ins, move-outs, and occupancies, we currently expect marketing expense to
increase at a somewhat lesser rate in 2017.
Other direct store costs include general and administrative expenses incurred at the stores, such as store insurance, business license
costs, bank charges related to processing the stores’ cash receipts, credit card fees, and the cost of operating each store’s rental office
including supplies and telephone data communication lines. These costs decreased 8.2% or $3,343 in the three months ended December 31,
2016 as compared to the same period in
18
2015, and decreased 1.1% or $1,648 in the twelve months ended December 31, 2016 as compared to the same period in 2015. Lien
administration expenses decreased 25.7% or $1,158 in the three months ended December 31, 2016 as compared to the same period in 2015,
and decreased 28.5% or $5,220 in the twelve months ended December 31, 2016 as compared to the same period in 2015. Increased store
level cost efficiencies and fewer tenants’ stored items auctions contributed to the decreased expenses, which were partially offset by
increases in our credit card or merchant fees. Credit card fees increased due to a higher proportion of rental payments being 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 2017.
Combined Same-Store and Non Same-Store Self Storage Operations
At December 31, 2016, we owned 7 same-store facilities and 4 non same-store facilities. The non same-store facilities are SSG
Fishers LLC, SSG Lima LLC, Tuxis Self Storage I LLC, and Tuxis Self Storage II LLC.
Combined same-store and non same-store average overall square foot occupancy for the three months and year ended December 31,
2016 decreased by 1.7% to 86.2% from 87.9% for the same period in 2015. This includes the impact from the Bolingbrook expansion
project completed during the fourth quarter of 2016. Excluding the additional vacancy created in this store, ending occupancy would have
been 90.2%, an increase of 2.3% compared to the same period in 2015.
We grew our top-line results by increasing combined same-store and non same-store (“Combined store”) revenues by 40.1% for the
three months ended December 31, 2016 versus the three months ended December 31, 2015, and by 18.2% for the twelve months ended
December 31, 2016 versus the twelve months ended December 31, 2015. Combined store cost of operations increased by 45.9% for the
three months ended December 31, 2016 versus the three months ended December 31, 2015, and by 20.2% for the twelve months ended
December 31, 2016 versus the twelve months ended December 31, 2015. Combined store NOI increased by 36.2% for the three months
ended December 31, 2016 versus the three months ended December 31, 2015, and by 16.8% for the twelve months ended December 31,
2016 versus the twelve months ended December 31, 2015. General and administrative expense increased by 13.2% for the three months
ended December 31, 2016 versus the three months ended December 31, 2015, and by 18.0% for the period January 19, 2016 to December
31, 2016 versus the twelve months ended December 31, 2015. The increase in the general and administrative expense during the most
recent quarter can be primarily attributed to an increase in legal, accounting, compliance, NASDAQ listing fees, and investor relations and
capital market consulting expenses. Going forward, although we currently expect some general and administrative expense reductions
associated with our discontinued registration as an investment company, we are incurring and expect to incur a number of new expenses
related to, among other things, the Company’s new reporting and regulatory requirements.
We believe that our results were driven by, among other things, our internet and digital marketing initiatives which helped our
overall average occupancy maintain in the mid-to-high 80% range as of December 31, 2016. Also, contributing to our strong results were
our customer service efforts which we believe were essential in building local brand loyalty resulting in referral and word-of-mouth market
demand for our storage units and services.
19
These results are summarized as follows:
COMBINED SAME - STORE AND NON SAME - STORE PROPERTIES
Revenues
Cost of operations
Net operating income
YTD 2016
$ 5,245,373
YTD 2015
$ 4,439,297
Variance
$
806,076
$ 2,155,492
$ 1,793,319
$
362,173
$ 3,089,881
$ 2,645,978
$
443,903
Depreciation and amortization
$
813,796
$
635,226
$
178,570
Net leasable square footage at period end
754,095
485,578
268,517
Net leased square footage at period end
649,897
427,064
222,833
% Change
18.2 %
20.2 %
16.8 %
28.1 %
55.3 %
52.2 %
Overall square foot occupancy at period end
86.2 %
87.9 %
-1.7 %
-1.9 %
Total available leasable storage units
5,625
3,813
1,812
47.5 %
COMBINED SAME - STORE AND NON SAME - STORE PROPERTIES
Revenues
Cost of operations
Net operating income
Q4 2016
$ 1,556,214
Q4 2015
$ 1,110,983
Variance
$
445,231
$
652,069
$
447,015
$
205,054
$
904,145
$
663,968
$
240,177
Depreciation and amortization
$
306,177
$
161,601
$
144,576
Net leasable square footage at period end
754,095
485,578
268,517
Net leased square footage at period end
649,897
427,064
222,833
% Change
40.1 %
45.9 %
36.2 %
89.5 %
55.3 %
52.2 %
Overall square foot occupancy at period end
86.2 %
87.9 %
-1.7 %
-1.9 %
Total available leasable storage units
5,625
3,813
1,812
47.5 %
Analysis of Combined Same-Store and Non Same-Store Revenue
Combined same-store and non same-store average overall square foot occupancy for the three months and year ended December 31,
2016 decreased by 1.7% to 86.2% from 87.9% for the same period in 2015. This includes the impact from the Bolingbrook expansion
project completed during the fourth quarter of 2016. Excluding the additional vacancy created in this store, ending occupancy would have
been 90.2%, an increase of 2.3% compared to the same period in 2015.
For the three months ended December 31, 2016, the 40.1% revenue increase was due primarily to a 52.1% increase in net leased
square footage and the results of our revenue rate management program of raising existing tenant rates. This increase in net leased square
feet, as a result of our Fishers, IN, Lima, OH, Clinton, CT, and Millbrook, NY acquisitions, is expected to positively affect combined
revenues in 2017. For the twelve months ended December 31, 2016, the 18.2% revenue increase was due primarily to a 52.1% increase in
net leased square
20
footage and the results of our revenue rate management program of raising existing tenant rates. Combined revenues benefited from
existing tenant rent increases, an increase in available climate-controlled leasable square feet compared to available leasable parking square
feet, and, to a lesser extent, increased move-in rental rates, and decreased move-in rent “specials” discounting.
We believe that high occupancies help maximize our rental income. We seek to maintain an average square foot occupancy level at
or above 90% by regularly adjusting the rental rates and promotions offered to attract new tenants as well as adjusting our marketing efforts
on the internet in order to generate sufficient move-in volume to replace tenants that vacate. Demand fluctuates due to various local and
regional factors, including the overall economy. Demand is typically higher in the summer months than in the winter months and, as a
result, rental rates charged to new tenants are typically higher in the summer months than in the winter months.
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 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 in 2017 to be slightly less than the prior year.
We believe that the current trends in move-in, move-out, in place contractual rents and occupancy levels are consistent with our
current expectation of continued revenue growth. However, such trends, when viewed in the short-term, are volatile and not necessarily be
predictive of our revenues going forward because they are subject to many short-term factors. Such factors include, among others, initial
move-in rates, seasonal factors, the unit size and geographical mix of the specific tenants moving in or moving out, the length of stay of the
tenants moving in or moving out, changes in our pricing strategies, and the degree and timing of rate increases previously passed to existing
tenants.
Importantly, we continue to refine our ongoing revenue management program which includes regular internet data scraping of local
competitors’ prices. We do this in order to maintain our competitive market price advantage for our various sized storage units at our
stores. This program helps us seek to maximize each store’s occupancies and our self storage revenue and NOI. We believe that through our
various marketing initiatives, we can seek to continue to attract high quality, long term tenants who we expect will be storing with us for
years. Currently, our average tenant duration of stay is approximately three years, up from approximately two years for the same period in
2015.
Analysis of Combined Same-Store and Non Same-Store Cost of Operations
Combined same-store and non same-store cost of operations increased 45.9% or $205,054 for the three months ended December 31,
2016 versus the three months ended December 31, 2015, and increased 20.2% or $362,173 for the twelve months ended December 31,
2016 versus the twelve months ended December 31, 2015. This increase in combined same-store and non same-store cost of operations was
due primarily to increased store level employment costs including rising employee health plan expenses, store property tax expense, repair
and maintenance, and marketing expense due to our new store acquisitions, which were partially offset by decreases in professional,
administrative, and lien administration costs.
On-site store manager payroll expense increased 40.3% or $52,294 for the three months ended December 31, 2016 versus the three
months ended December 31, 2015, and increased 24.0% or $114,108 for the twelve months ended December 31, 2016 as compared to the
same period in 2015. This increase was due primarily to an increase in the number of store level employees due to our new store
acquisitions, wage increases, and higher employee health plan expenses. 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 and Regional
Managers.
21
Store property tax expense increased 37.9% or $56,305 for the three months ended December 31, 2016 versus the three months
ended December 31, 2015, and increased 18.3% or $104,045 in the twelve months ended December 31, 2016 as compared to the same
period in 2015, primarily due to increased such costs associated with our new store acquisitions and to higher assessed store property values
and tax rates, in particular for our Sadsburyville, PA store. We currently expect store property tax expense growth of approximately the
same amount in 2017.
Repairs and maintenance expense increased 126.5% or $29,344 for the three months ended December 31, 2016 versus the three
months ended December 31, 2015, and increased 41.2% or $40,962 for the twelve months ended December 31, 2016 as compared to the
same period in 2015 primarily due to increased such costs associated with our new store acquisitions and to performing certain mandatory
repairs as part of our mortgage loan covenants and requirements in accordance with the Loan Documents. As of December 31, 2016, the
majority of these repairs have been completed. Also contributing to the increase in repair and maintenance expense is our ongoing LED
light replacement program expenses in 2016 as compared to 2015. We anticipate continued focus on our LED light replacement program
throughout 2017. At our stores fully converted to LED lighting, we have realized utilities expense savings year-over-year of approximately
10% to 40% depending on the store due to lower kilowatt per hour usage.
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 aforementioned ongoing LED light replacement program at all of our stores which has already resulted in lower electricity
usage. Utility expense increased 97.5% or $22,779 for the three months ended December 31, 2016 versus the three months ended
December 31, 2015, and increased 11.7% or $15,289 for the twelve months ended December 31, 2016 as compared to the same period in
2015 primarily due to increased such costs associated with our new store acquisitions. 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 net lower utility
costs in 2017.
Landscaping expenses, which include snow removal costs, increased 45.3% or $6,854 for the three months ended December 31,
2016 versus the three months ended December 31, 2015, and increased 7.8% or $5,824 in the twelve months ended December 31, 2016
compared to the same period in 2015 primarily due to increased such costs associated with our new store acquisitions. 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 2017, excluding snow removal expense, which is primarily weather dependent and unpredictable.
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 54.8% or $21,392 for the
three months ended December 31, 2016 versus the three months ended December 31, 2015, and increased 40.4% or $68,589 for the twelve
months ended December 31, 2016 as compared to the same period in 2015 primarily due to increased such costs associated with our new
store acquisitions and to the increased internet advertising expenses and the one-time costs associated with the production and addition of
size estimator and locations videos to our stores’ website, www.GlobalSelfStorage.us. Based upon current trends in move-ins, move-outs,
and occupancies, we currently expect marketing expense to increase at a somewhat lesser rate in 2017.
Other direct store costs include general and administrative expenses incurred at the stores, such as store insurance, business license
costs, bank charges related to processing the stores’ cash receipts, credit card fees, and the cost of operating each store’s rental office
including supplies and telephone data communication lines. These costs increased 27.1% or $11,052 in the three months ended December
31, 2016 as compared to the same period in 2015, and increased 10.9% or $17,001 in the twelve months ended December 31, 2016 as
compared to the same period in 2015 primarily due to increased such costs associated with our new store acquisitions. Increased store level
costs efficiencies and fewer tenants’ stored items auctions contributed to the decreased expenses, which were partially offset by increases in
our credit card or merchant fees. Credit card fees increased due to a higher proportion of rental payments being 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 2017.
22
Analysis of General and Administrative Expenses
General and administrative expenses represent direct and allocated expenses for shared general corporate functions, which are
allocated to store operations to the extent they are related to store operations. Such functions include, among other things, data processing,
human resources, legal, corporate and operational accounting and finance, marketing, and compensation of senior executives.
Three Months Ended December 31,
General and administrative
2016
351,426 $
$
2015
310,378 $
Variance
% Change
41,048
+13.2%
For the Period January 19, 2016 to December 31, 2016 compared to the year ended December 31, 2015
General and administrative
2016
2015
Variance
% Change
$ 1,406,441 $ 1,191,768 $
214,673
+18.0%
General and administrative expenses increased 13.2% or $41,048 for the three months ended December 31, 2016 versus the three
months ended December 31, 2015, and increased 18.0% or $214,673 for the period January 19, 2016 to December 31, 2016 as compared to
the twelve months ended December 31, 2015. Most of the increase in the general and administrative expense during the most recent quarter
is attributable to an increase in legal, accounting, compliance, NASDAQ listing fees, and investor relations and capital market consulting
expenses. We experienced certain cost reductions due to our transition from an investment company to an operating company, such as costs
associated with fund accounting, custodian, registration, and quarterly appraisals. Concomitantly, we experienced increased legal,
accounting, regulatory compliance, and investor relations expenses. Going forward, although we currently expect some general and
administrative expense reductions associated with our discontinued registration as an investment company, we are incurring and expect to
incur a number of new expenses related to, among other things, the Company’s new reporting and regulatory requirements.
The Company incurred fees and expenses of approximately $646,000 associated with the Loan Documents, the of which were
capitalized and are amortized over the term of the loan.
Analysis of Business Development and Store Acquisition Expenses
Business development and store acquisition expenses increased from $0 during the three and twelve months ended December 31,
2015 to $52,167 and $449,738 during the three and twelve months ended December 31, 2016, respectively. These costs primarily consisted
of legal and consulting costs in connection with business development activities and future potential store acquisitions. The majority of
these expenses are non-recurring and fluctuate based on business development activity during the time period.
Analysis of Loan Interest and Amortization Expense
Loan interest expense payments relating to the aforementioned $20 million loan increased from $0 for the three and twelve months
ended December 31, 2015 to $220,209 and $456,719 for the three and twelve months ended December 31, 2016. Going forward the cash
payments for this expense will be $69,867 per month until June 2018 at which point the monthly interest and amortization payment due
will increase to $107,699 where it will remain payable every month until June 2036.
23
Analysis of Global Self Storage Funds from Operations (“FFO”) and Funds from Operations as Adjusted (“AFFO”)
The following tables present a reconciliation and computation of net income to FFO and AFFO and earnings per share to FFO and
AFFO per share:
Net income
Eliminate items excluded from FFO:
Depreciation and amortization
Realized gain on investment securities
FFO attributable to common stockholders
Adjustments:
Business development and property acquisition costs
Three Months
Ended
December 31, 2016
564,687
$
For the Period
January 19, 2016
to
December 31, 2016
384,135
$
357,567
(602,428 )
952,507
(602,428 )
319,826
734,214
52,167
449,738
AFFO
$
371,993 $
1,183,952
FFO and FFO as adjusted per weighted average shares outstanding
Net income
Eliminate items excluded from FFO:
Depreciation and amortization
Realized gain on investment securities
FFO per share attributable to common stockholders
Adjustments:
Business development and property acquisition costs
AFFO per share attributable to common stockholders
$
0.08 $
0.05
(0.08 )
0.04
0.01
0.05
0.13
(0.08 )
0.10
0.06
$
0.05 $
0.16
Analysis of Global Self Storage Store Operations
In addition to actively reviewing a number of store and portfolio acquisition candidates, we have been working to further develop
and expand our current stores.
At our Sadsburyville, PA store in 2015, we completed construction of a state-of-the-art, all climate-controlled two story storage
building, adding 16,756 leasable square feet featuring a number of unique drive-up, climate-controlled units. This expansion appears to
have been well received by the local market. As of December 31, 2016, approximately 18 months after construction was completed and
lease-up commenced, 100% of the first floor and 82% of the entire building have been leased.
At our Bolingbrook, IL store in 2016, all site work, construction, and final inspections and approvals of the expansion project in
Bolingbrook, IL were completed. This expansion has added approximately 44,260 leasable square feet and 304 of climate-controlled and
traditional storage units bringing the total to 110,600 leasable square feet and 801 storage units. The project cost approximately $2,600,000,
which equates to an all-in cost of approximately $59 per square foot. As of December 31, 2016, 21.3% or 9,360 square feet of the five
building expansion leasable square feet had been leased. This lease-up has been faster than expected.
We are currently reviewing our Merrillville, IN store for the possible expansion construction of three new traditional drive-up
storage unit buildings totaling 13,300 square feet.
24
Analysis of Realized and Unrealized Gains (Losses)
Realized gains for the period ended December 31, 2016 were $602,428 compared to $900,368 for the period ended December 31,
2015. As we continue to acquire and/or develop additional stores, as part of the funding for such activities, we plan to liquidate our
investment securities holdings and potentially realize gains or losses. As of December 31, 2016, our unrealized gain on investment
securities available-for-sale was $718,463.
Distributions and Closing Market Prices
Distributions for the three months ended December 31, 2016 totaled $0.065 per share and for the twelve months ended December
31, 2016 totaled $0.26 per share. The Company’s closing market price as of December 31, 2016 was $4.77 and as of December 31, 2015
was $3.92. Past performance does not guarantee future results.
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 8.
Financial Statements and Supplementary Data.
The financial statements are included in this annual report beginning on page F-3.
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
There were no changes in or disagreements with our accountants on accounting and financial disclosures during the last two fiscal
years.
Item 9A.
Controls and Procedures.
Disclosure Controls and Procedures.
We maintain disclosure controls and procedures to ensure that information required to be disclosed in the reports we file pursuant to
the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC,
and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls
and procedures” in Rule 13a-15(e) of the Exchange Act. In designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and operated, can only provide a reasonable assurance of
achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and procedures.
We have a disclosure controls and procedures committee, comprised of the Chief Executive Officer and Chief Financial Officer,
which meets as necessary and is responsible for considering the materiality of information and determining our disclosure obligations on a
timely basis.
The disclosure controls and procedures committee carried out an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period
covered by this report.
Management’s Annual Report on Internal Control Over Financial Reporting.
This annual report does not include a report of management's assessment regarding internal control over financial reporting or an
attestation report of the Company's registered public accounting firm due to a transition period established by rules of the Securities and
Exchange Commission for newly public companies.
25
Changes in Control Over Financial Reporting.
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(d) and 15d-15(d) under the
Exchange Act) that occurred during our fiscal fourth quarter that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
Item 9B.
Other Information.
None.
26
PART III
Item 10.
Directors, Executive Officers and Corporate Governance.
The following table sets forth certain information concerning the directors currently serving on the Board of Directors of the
Company. The term of the Class I director shall last until the annual meeting of stockholders held in 2017 and until his successor is elected
and qualifies. The term of the Class II directors shall last until the annual meeting of stockholders held in 2018 and until their successors
are elected and qualify. The term of the Class III directors shall last until the annual meeting of stockholders held in 2019 and until their
successors are elected and qualify. At each annual meeting of the stockholders of the Company, the successors to the class of directors
whose term expires at that meeting shall be elected to hold office for a term continuing until the annual meeting of stockholders held in the
third year following the year of their election and until their successors are elected and qualify.
Name, Address,(1) and
Date of Birth
INTERESTED DIRECTORS
MARK C. WINMILL(2)
November 26, 1957
Position(s)
Held
with the
Company
Class III Director,
President, Chief
Executive Officer
Director
Since
2012
Principal
Occupation(s) and Directorship(s)
for the Past Five Years
and
(“Tuxis”)
development
President, Chief Executive Officer, and a Director of the
Company and its subsidiaries. He is also President, Chief
Executive Officer, and a Director of Tuxis Corporation (a real
estate
its
company)
subsidiaries. He is Vice President of Dividend and Income
Fund, Foxby Corp., and Midas Series Trust (collectively, the
“Funds”) and Chief Investment Strategist of Bexil Advisers
LLC and Midas Management Corporation
(registered
investment advisers and, collectively, the “Advisers”). He is
Executive Vice President and a Director of Winmill & Co.
Incorporated (a holding company) (“Winco”). He is a
principal of Bexil Securities LLC and Midas Securities
Group, Inc. (registered broker-dealers and, collectively, the
“Broker-Dealers”). He is Vice President of Bexil Corporation
(a holding company) (“Bexil”). He was selected to serve on
our Board because of his experience and extensive knowledge
of the self storage industry and his knowledge of and
experience with the Company. (3)
THOMAS B. WINMILL, ESQ.(2)
PO Box 4
Walpole, NH 03608
June 25, 1959
Class II Director, Vice
President
1997
Vice President and a Director of the Company. He is also
President, Chief Executive Officer, and a Director or Trustee
of the Funds. He is President, Chief Executive Officer,
General Counsel, and a Director or Manager of the Advisers,
the Broker-Dealers, Bexil, and Winco. He is a Director of
Bexil American Mortgage Inc. (“Bexil American”). He is
Vice President of Tuxis. He is a member of the New York
State Bar and the SEC Rules Committee of the Investment
Company Institute. He was selected to serve on our Board
because of his experience and extensive knowledge of
financial, accounting, regulatory, investment, and board
operational matters. (3)
27
Name, Address,(1) and
Date of Birth
INDEPENDENT DIRECTORS
Position(s)
Held
with the
Company
Director
Since
Principal
Occupation(s) and Directorship(s)
for the Past Five Years
RUSSELL E. BURKE III
August 23, 1946
Class III Director
2016
GEORGE B. LANGA
August 31, 1962
Class II Director
2016
WILLIAM C. ZACHARY
December 9,1964
Class I Director
2016
He is a Director of the Company. He is also President of Ninigret
Trading Corporation, an art investment and appraisal company. He
is a Board Member of the New Britain Museum of American Art.
He previously served as a Director of Tuxis from 1997 to
2016. He was selected to serve on our Board because of his prior
experience serving on the board of a self storage company and his
experience and extensive knowledge of the self storage industry.
He is a Director of the Company. He is also Executive Vice
President of Millbrook Real Estate, LLC, licensed real estate
brokers in NY and CT. He specializes in premium Estates,
Development, Land, Commercial and Agricultural Properties. He
was selected to serve on our Board because of his experience with
and extensive knowledge of commercial real estate transactions,
marketing, and management.
He is a Director of the Company. Since 2011, he has been
Director of Municipal Finance at SunLight General Capital, an
owner and developer of solar energy systems located at schools,
municipal buildings, and other small, institutional users. Prior to
that, he was the head of Municipal Finance at Société Générale. He
previously served as a Director of Tuxis from 2014 to 2016. He
was selected to serve on our Board because of his prior experience
serving on the board a self storage company and his experience in
underwriting finance.
(1)
(2)
(3)
Unless otherwise noted, the address of record for the directors and officers is 11 Hanover Square, New York, New York 10005.
He may be deemed to be an “interested person” of the Company due to his role as an officer and director of the Company. Mark C.
Winmill and Thomas B. Winmill are brothers.
Dividend and Income Fund, Foxby Corp., and Midas Series Trust, Tuxis, the Advisers, Winco, the Broker-Dealers, Bexil, and
Bexil American may be deemed to be affiliates of the Company.
28
The executive and other officers, other than those who serve as directors, and their relevant biographical information are set forth
below.
EXECUTIVE AND OTHER KEY OFFICERS
Name and
Date of Birth
Russell Kamerman, Esq.
July 8, 1982
Position(s)
Held with
the Company
Chief Compliance
Officer, Associate
General Counsel, Vice
President and Assistant
Secretary
Officer
Since*
2014
Principal
Occupation(s) and Directorship(s)
for the Past Five Years
Chief Compliance Officer, Associate General Counsel, Vice
President and Assistant Secretary of the Company. He is also Chief
Compliance Officer, Anti-Money Laundering Officer, Associate
General Counsel, Vice President and Assistant Secretary of the
Funds, the Advisers, the Broker-Dealers, Bexil, Tuxis, and Winco.
He is a member of the New York State Bar and the Chief
Compliance Officer Committee of
the Investment Company
Institute. Previously, he was an attorney in private practice focusing
on regulatory, compliance and other general corporate matters
relating to the structure, formation and operation of investment
funds and investment advisers from 2008 to 2014.
Vice President
1997
Vice President of the Company. She is also Vice President of the
Funds, the Advisers, the Broker-Dealers, Bexil, Tuxis, and Winco.
Heidi Keating
March 28,1959
Robert J. Mathers
May 5, 1967
Thomas O’Malley
July 22, 1958
Vice President,
Operations
Chief Financial Officer,
Treasurer, Vice
President
John F. Ramirez, Esq.
April 29,1977
General Counsel, Chief
Legal Officer, Secretary,
Vice President
Angelito Sarabia
November 18, 1963
Controller
2013
2012
2005
2005
Vice President, Operations of the Company. He is also Vice
President, Operations of Tuxis.
Chief Financial Officer, Treasurer, and Vice President of the
Company. He is also Chief Financial Officer, Treasurer, and Vice
President of the Funds, the Advisers, the Broker-Dealers, Bexil,
Tuxis, and Winco. He is a certified public accountant.
General Counsel, Chief Legal Officer, Vice President, and
Secretary of the Company. He is also General Counsel, Chief Legal
Officer, Vice President, and Secretary of the Funds and Tuxis. He is
Vice President, Senior Associate General Counsel, and Secretary of
the Advisers, the Broker-Dealers, Bexil, and Winco. He also is a
member of the New York State Bar.
Controller of the Company. Previously, he was a senior accountant
at Green Chimneys, a non-profit focused on children’s services,
from 2011 to 2013.
*
Officers hold their positions with the Company until a successor has been duly elected and qualifies. Officers are generally
elected annually. The officers were last elected on December 22, 2016.
We have adopted a Code of Conduct and Ethics in compliance with rules of the SEC that applies to all of our personnel, including
our Board of Directors, Chief Executive Officer, and Chief Financial Officer. The Code of Conduct and Ethics is available free of charge
on the “Governance Documents” section of our website at http://ir.globalselfstorage.us/. We intend to satisfy any disclosure requirements
under Item 5.05 of Form 8-K regarding amendments to, or waivers from, provisions of our Code of Conduct and Ethics by posting such
information on our web site at the address specified above.
29
Section 16(a) Beneficial Ownership Reporting Compliance
Based on the Company’s review of Forms 3 and 4 and amendments thereto furnished to the Company during its most recent fiscal
year and Forms 5 and amendments thereto furnished to the Company with respect to its most recent fiscal year, the Company believes that
its directors and officers, and any beneficial owners of more than 10% of the Company’s common stock complied with the filing
requirements of Section 16(a) of the Exchange Act except with respect to the following:
Name of Filer
Form Type
Number of
Late Reports
Number of
Transactions
Russell E. Burke III
Bruce B. Huber
George. B. Langa
Mark C. Winmill
William C. Zachary
Audit Committee Financial Expert
4
5
4
4
4
1
1
1
1
1
—
2
—
1
—
The Company’s Board of Directors has determined that it has three “audit committee financial experts” (as that term is defined
under SEC rules implementing Section 407 of the Sarbanes-Oxley Act) serving on its Audit Committee, each of whom are “independent”
directors that satisfy the heightened audit committee independence requirements under the NASDAQ Listing Rules and Rule 10A-3 of the
Exchange Act. Further, each member of the Audit Committee possesses the requisite financial sophistication, as defined under the
applicable rules and regulations of NASDAQ.
Item 11.
Executive Compensation.
The following is a description of the material elements of compensation for our named executive officers listed below:
•
•
Mark C. Winmill, President and Chief Executive Officer; and
Thomas O’Malley, Chief Financial Officer, Treasurer, and Vice President.
For the years ended December 31, 2015 and December 31, 2016, respectively, no other Company officer’s total compensation
exceeded $100,000.
Summary Compensation Table
The following table provides summary information concerning compensation paid or accrued by the Company to or on behalf of
our named executive officers for services provided to the Company during the years ended December 31, 2016 and 2015. The Company
has not granted or paid any stock awards, option awards, nonequity incentive plan compensation, or nonqualified deferred compensation
earnings to any of its employees, officers, or directors.
Name and Principal Position
Mark C. Winmill
President and Chief Executive Officer
Thomas O’Malley
Chief Financial Officer, Treasurer, and
Vice President
Salary
($)
270,000
255,000
114,327
All Other
Compensation
(1)
($)
49,054
43,868
7,502
Bonus
($)
20,385
10,385
9,918
Total
($)
339,439
309,253
131,747
75,278
3,825
4,918
84,021
Year
2016
2015
2016
2015
30
(1)
All Other Compensation for the Company’s named executive officers for the year ended December 31, 2016 consisted of:
Name
Mark C. Winmill
Thomas O’Malley
401 (k)
Match
($)
8,648
6,663
Benefits
($)
19,305
839
Auto
Lease and
Insurance
($)
21,101
—
Total of
All Other
Compensation
($)
49,054
7,502
Mr. Winmill’s compensation as President and CEO of the Company is determined by the Compensation Committee and consists of
a salary, bonus, employee benefits, and/or reimbursement of reasonable business expenses. The Compensation Committee reviews and
approves corporate goals and objectives relevant to Mr. Winmill’s compensation, evaluates his performance relative to those goals and
objectives, and sets his compensation annually. As of December 31, 2016, Messrs. Winmill and O’Malley’s compensation plan generally
consisted of base salary, employee benefits plan participation, qualified retirement plan participation, bonuses, and certain prerequisites. A
portion of Messrs. Winmill and O’Malley’s compensation may be deferred at their election.
Mr. Winmill’s base salary is typically determined annually by the Compensation Committee by level of responsibility and tenure at
the Company. For 2015 and 2016, the Board directed that non-CEO employee compensation, including Mr. O’Malley’s, be set based on a
general methodology used in prior years whereby the total level of compensation for each employee that is concurrently employed by the
Company and its affiliates is set by Mark Winmill, as CEO of the Company and Tuxis, and Thomas Winmill, as CEO of the Company’s
other affiliates, and then allocated based on time allocation reports of each such non-CEO employee or other means deemed appropriate by
Messrs. Mark and Thomas Winmill.
The primary components of Mark Winmill and Thomas O’Malley’s bonuses are typically based on, among other things, (i) number
of weeks’ salary paid as bonuses to Company employees generally, and/or (ii) the financial performance of the Company. A subjective
component of Mark Winmill and Thomas O’Malley’s bonuses may be based on their overall contribution to management of the Company.
Benefits consist of premiums paid by the Company for medical, dental, vision, life, and long term disability insurances. The
Company and its affiliates (as detailed below) participate in a 401(k) retirement savings plan for substantially all qualified employees. A
matching expense based upon a percentage of contributions to the plan by eligible employees is incurred and allocated among the Company
and its affiliates. The matching expense is accrued and funded on a current basis and may not exceed the amount permitted as a deductible
expense under the IRC. The Company’s allocated matching expense to Mark Winmill and Thomas O’Malley under the plan was $8,648
and $6,663, respectively, for the year ended December 31, 2016.
The Company provides a maximum monthly automobile allowance of $1,000 per month to Mark C. Winmill. To the extent that the
monthly maximum payment under the Company’s automobile lease exceeds the monthly allowance, Mr. Winmill must reimburse the
Company for the excess amount. In this regard, Mr. Winmill has reimbursed the Company $1,878 for the automobile payments paid and
due in 2016.
The Company previously had an employment agreement with Mr. Winmill (the “Employment Agreement”) which terminated upon
the Company’s deregistration as an investment company on January 19, 2016. Under the Employment Agreement, Mr. Winmill held the
title of President and Chief Executive Officer of the Company and his compensation, with respect to the Company, consisted of a salary at
a rate of $22,500 per month, bonus, employee benefits, and/or reimbursement of reasonable business expenses. Upon termination of the
Employment Agreement, the Board elected to retain Mr. Winmill as President and Chief Executive Officer of the Company.
31
Director Compensation
Currently, the independent directors are paid an annual retainer of $2,000, payable semi-annually, a fee of $6,000 for each semi-
annual Board meeting attended, $250 for each special Board meeting attended, $250 for each committee meeting attended, and $500 per
annum per committee chaired. Each independent director is reimbursed for reasonable travel and out-of-pocket expenses associated with
attending Board and committee meetings.
A summary of the compensation and benefits for the directors of the Company for the fiscal year ended December 31, 2016 is
shown in the following table:
Name
Independent Directors:
Russell E. Burke III
George B. Langa
William C. Zachary
Interested Directors:
Thomas B. Winmill
Fees earned
or paid in
cash
($)
All other
compensation
($)
Total
($)
$
$
$
$
12,250 $
12,250 $
12,250 $
— $
— $
— $
12,250
12,250
12,250
— $
— $
—
32
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of February 28,
2017 for:
•
•
•
•
each shareholder known by us to be a beneficial owner of more than 5% of our capital stock;
each of our directors;
each of our named executive officers; and
all of our directors and officers as a group.
We have determined beneficial ownership in accordance with the rules of the SEC. Under these rules, beneficial ownership includes
any shares as to which the individual or entity has sole or shared voting power or investment power. There are no shares of common stock
subject to options or other rights exercisable outstanding as of the date of this annual report. Except as indicated in the footnotes below, we
believe, based on the information furnished to us, that the persons and entities named in the table below have sole or shared voting and
investment power with respect to all of the common stock that they beneficially own.
Applicable percentage ownership is based on 7,619,469 shares of common stock outstanding as of February 28, 2017. Unless
otherwise indicated, the address of each beneficial owner in the table is: Global Self Storage, Inc., 11 Hanover Square, New York, NY
10005.
Name
5% Shareholder:
Financial & Investment Management Group, Ltd.
111 Cass St. Traverse City, MI 49684
Named Executive Officers and Directors:
Mark C. Winmill
Thomas B. Winmill PO Box 4 Walpole, NH 03608
Winmill Family Trust
Winmill & Co. Incorporated
Tuxis Corporation
Russell E. Burke
William C. Zachary
George B. Langa
Thomas O'Malley
Directors and officers as a group (11)
Amount and
Nature of
Beneficial
Ownership
Percentage of
Outstanding
Shares
925,892 (1)
12.48 %
401,879 (2)
357,204 (3)
351,993 (4)
351,993 (5)
223,766
15,160
1,000
156
—
419,080
5.27 %
4.69 %
4.62 %
4.62 %
2.94 %
*
*
*
*
5.50 %
*
(1)
Represents beneficial ownership of less than 1.00% of the outstanding shares of common stock.
The number of shares shown is based solely on the Form 13G filed by Financial & Investment Management Group, Ltd.
(“FIMG”) on March 7, 2017, according to which FIMG has shared voting and investment power over the shares reported. FIMG
states in such Form 13G that it is a registered investment advisor, managing individual client accounts and that all shares
represented in the report are held in accounts owned by the clients of FIMG. FIMG disclaims beneficial ownership of the shares
reported. According to Form ADV filed by FIMG, Mr. Paul Sutherland appears to control FIMG.
(2) Mark C. Winmill used personal funds to acquire 30,460 directly owned shares. Mr. Mark Winmill is a Director, Chairman of the
Board, President, and Chief Executive Officer of Tuxis and may be deemed to have indirect beneficial ownership of 223,766
shares directly owned by Tuxis. Mr. Mark Winmill is a trustee of the Winmill Family Trust, which owns all of the voting stock of
Winco, and may be deemed to have indirect beneficial ownership of 128,227 shares directly owned by Winco. Additionally, Midas
Securities Group, Inc. (“Midas Securities”), a wholly owned subsidiary of Winco, directly owns approximately 19% of Tuxis’
outstanding shares of common stock and may be deemed to have indirect beneficial ownership of the shares
33
(3)
directly owned by Tuxis. Mr. Mark Winmill also is a trustee of the Michael M. George Trust and may be deemed to have indirect
beneficial ownership of 15,000 shares directly owned by the Michael M. George Trust. Lastly, Mr. Mark Winmill has
discretionary authority over 4,426 shares directly owned by Sarah J. Winmill, his mother, and may be deemed to have indirect
beneficial ownership of such shares. Mr. Mark Winmill disclaims beneficial ownership of the shares owned, or which may be
deemed to be owned, by Tuxis, the Winmill Family Trust, Winco, Midas Securities, the Michael M. George Trust, and Sarah J.
Winmill.
Thomas B. Winmill is a trustee of the Winmill Family Trust and may be deemed to have indirect beneficial ownership of the
351,993 shares directly and indirectly owned by Winco as a result of his status as a controlling person of the Winmill Family
Trust. Mr. Thomas Winmill has discretionary authority over the financial affairs of Sarah J. Winmill, his mother, and as a result
may be deemed to have indirect beneficial ownership of the 4,426 shares held by Sarah J. Winmill. Mr. Thomas Winmill disclaims
beneficial ownership of the aforementioned shares. Mr. Thomas Winmill beneficially owns less than 1% of the outstanding shares
of the Company. He does not disclaim beneficial ownership of these 785 shares.
The Winmill Family Trust owns all of the voting stock of Winco.
(4)
(5) Winco has direct beneficial ownership of 128,227 shares and may be deemed to have indirect beneficial ownership of 223,766
shares held by Tuxis. Midas Securities directly owns approximately 19% of Tuxis’ outstanding shares of common stock and may
be deemed to have indirect beneficial ownership of the shares directly owned by Tuxis. Winco disclaims beneficial ownership of
the 223,766 shares held by Tuxis.
Equity Compensation Plan Information
Not applicable.
Item 13.
Certain Relationships and Related Transactions, and Director Independence.
There are no currently proposed transactions nor have there been any transactions during the Company’s last two fiscal years in
which the Company was or is to be a participant and the amount involved exceeds $120,000, and in which any related person (as defined in
Item 404 of Regulation S-K of the Exchange Act) had or will have a direct or indirect material interest, except for the transaction with
Tuxis described below. The Company has not had a promoter at any time during the past five fiscal years and does not have a parent.
Transaction with Tuxis
On November 23, 2016, the Company entered into the Purchase Agreement with Tuxis, a Company affiliate, to acquire all of the
membership interests of the Tuxis Subsidiaries, for the aggregate purchase price of $7,800,000, comprised of $5,925,000 payable in cash,
$975,000 in shares of the Company’s common stock, and, contingent upon the satisfaction of certain conditions described in the Purchase
Agreement, an additional $900,000 cash payment.
On November 21, 2016, upon the unanimous recommendations of a special committee of independent disinterested directors (the
“Special Committee”) of the Board, the Board authorized the acquisition of all of the membership interests of the Tuxis Subsidiaries and
the Company’s entry into the Purchase Agreement by and between the Company and Tuxis. Tuxis has the same Chairman of the Board,
President, and Chief Executive Officer as the Company. In addition, Tuxis has substantially the same officers as the Company and also has
a number of employees in common with the Company. Mark Winmill is a director, Chairman of the Board, President, and Chief Executive
Officer of the Company and Tuxis. Thomas O’Malley is Treasurer, Chief Financial Officer, and a Vice President of the Company and
Tuxis. John Ramírez is Secretary, General Counsel, and a Vice President of the Company and Tuxis. Thomas Winmill, the brother of Mark
Winmill, is a Vice President of Tuxis and a director and Vice President of the Company.
Each of Mark Winmill and Thomas Winmill is a trustee of the Winmill Family Trust, which owns all of the voting stock of Winco.
As of October 11, 2016, the record date for Tuxis’ stockholder meeting (the “Record Date”) to consider, among other things, the Purchase
Agreement, Midas Securities, a wholly owned subsidiary of Winco, owned 234,665 shares (or approximately 19%) of Tuxis’ outstanding
shares of common stock. Additionally, as of the Record Date, Winco and Tuxis owned approximately 1.7% and 0.3%, respectively, of the
Company’s outstanding common stock. Mark Winmill and Thomas Winmill may be deemed to have indirect beneficial
34
ownership of the Company’s shares owned by Midas Securities, Winco, and Tuxis, respectively, as a result of their status as controlling
persons of the Winmill Family Trust. Each of Mark Winmill and Thomas Winmill disclaims beneficial ownership of these shares. Pursuant
to the recommendation of a special committee of independent disinterested directors of Winco’s Board of Directors, Winco voted all of the
Tuxis shares held by Midas Securities in favor of the sale of the Tuxis Subsidiaries.
On November 18, 2016, the Tuxis Board of Directors authorized a special dividend to Tuxis stockholders of $0.10 per share of
Tuxis common stock contingent upon the Closing (as defined herein) of the Purchase Agreement. Accordingly, Midas Securities received a
cash dividend of approximately $23,467 following the Closing. In addition, upon Closing, Tuxis used a portion of the proceeds to pay down
its liabilities due to certain affiliates, including Winco, in the amount of approximately $1 million.
Among other things, due to the commonality of a director and the officers of the Company and Tuxis, the Board formed the Special
Committee in seeking to ensure that the acquisition was fair to Company stockholders and in the best interests of the Company. The
Special Committee was comprised of Russell E. Burke III, George B. Langa, and William C. Zachary, each an independent disinterested
director of the Company. The Special Committee was granted the power to retain counsel and other advisers, to review, negotiate, and
evaluate the terms of the acquisition of the Tuxis Subsidiaries pursuant to the Purchase Agreement and determine whether to recommend to
the Board that the Board approve the acquisition of the Tuxis Subsidiaries and the Purchase Agreement. The Special Committee and the
Board each met four times to consider the acquisition of the Tuxis Subsidiaries.
After careful consideration, the Special Committee’s unanimous recommendations were determined based on a number of factors
including, among other things: negotiations between the Company and Tuxis overseen by the Special Committee and a special committee
of Tuxis’ independent disinterested directors, Susan Parker and Timothy Taft, that took place from February 2016 to November 2016;
valuation analyses by independent financial advisors; independent third party real estate appraisals; and market capitalization rates. The
Special Committee received a fairness opinion from an independent financial advisor, Akin Bay Company LLC (“Akin Bay”), that the
consideration paid by the Company for the acquisition of the Tuxis Subsidiaries pursuant to the Purchase Agreement was fair, from a
financial metrics point of view, to the Company’s stockholders. In connection with Akin Bay’s fairness opinion, among other things, Akin
Bay: analyzed Tuxis’ historical financial statements; reviewed the Company’s capital investment plan to expand TSS II’s existing self
storage facility; analyzed multi-year financial projections; conducted traditional valuation analyses of the properties owned by the Tuxis
Subsidiaries, which included discounted cash flow, present value, comparable public company valuation and independent third party real
estate appraisals; conducted a personal site survey of the Properties; reviewed valuation statistics for selected publicly traded real estate
investment trusts that focus on investing in self-storage real estate; discussed with Company management the current and prospective
performance of the Company, the Properties, market conditions and pricing parameters for properties similar to the Properties owned by
the Company; reviewed the Purchase Agreement and the registration rights agreement (the "Registration Rights Agreement") between the
Company and Tuxis; and conducted such other analyses that were deemed appropriate.
On December 30, 2016, the Company completed the acquisition of the Tuxis Subsidiaries (the “Acquisition”) for $5,925,000 in
cash and 202,703 unregistered and restricted shares of the Company's common stock and entered into the Registration Rights Agreement
which permits Tuxis to request the registration of such shares. Upon re-development and expansion approval at the Millbrook store and
satisfaction of other conditions, including construction groundbreaking, pursuant to the Purchase Agreement, an additional $900,000 cash
payment is expected to be made by the Company to Tuxis.
35
Other Relationships
Certain officers of the Company also serve as officers and/or directors of Winco, Bexil, Tuxis, and their affiliates (collectively with
the Company, the “Winco Affiliates”). As of December 31, 2016, certain of the Winco Affiliates owned approximately 4% of the
Company’s outstanding common stock. There may be conflicts of interest resulting from the relationships among the Company, the Winco
Affiliates, and other related parties. The outside business interests of the Company’s officers may divert their time and attention away from
the Company, and may result in a potential conflict with respect to the allocation of business opportunities, which could harm its
business. The Board has adopted policies and procedures designed to mitigate these conflicts of interest, such as allocation procedures for
determining the appropriate allocation of such business opportunities. Specifically, if any officer or director of the Company who also
serves as an officer, director, or advisor of the Winco Affiliates becomes aware of a potential transaction related primarily to the self
storage business that may represent a corporate opportunity for the Company and one or more of the Winco Affiliates, such officer or
director has no duty to present that opportunity to such Winco Affiliates and the Company will have the sole right to pursue the transaction
if the Board of Directors so determines. Notwithstanding the foregoing, officers or directors of the Company are encouraged to notify the
Winco Affiliates of such an opportunity.
Director Independence
The rules of NASDAQ generally require that a majority of the members of a listed company’s board of directors be independent. In
addition, the listing rules generally require that, subject to specified exceptions, each member of a listed company’s audit, compensation,
and governance committees be independent.
Accordingly, our Board of Directors has evaluated the independence of its members based upon the rules of the NASDAQ Stock
Market and the SEC and the transactions referenced under “Certain Relationships and Related Party Transactions” discussed above.
Applying these standards, our Board of Directors determined that none of the directors who currently serve, other than Messrs. Mark and
Thomas Winmill, have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a
director and that Messrs. Burke, Langa, and Zachary are “independent” as that term is defined under Rule 5605(a)(2) of the NASDAQ
Listing Rules. Messrs. Mark and Thomas Winmill are not considered independent because they are officers of the Company. Our Board of
Directors also determined that each non-employee director who serves as a member of the Audit, Compensation, and Nominating
Committees satisfies the independence standards for such committee established by the SEC and the NASDAQ Listing Rules, as
applicable.
Item 14.
Principal Accounting Fees and Services.
Our Audit Committee has appointed the firm of Tait, Weller & Baker LLP (“Tait, Weller”) to serve as our independent registered
public accounting firm for the year ending December 31, 2016. Tait, Weller has acted as the Company’s independent registered public
accounting firm since 1996, and our management considers the firm to be well qualified.
We have been advised by Tait, Weller that it is a registered public accounting firm with the PCAOB and complies with the auditing,
quality control and independence standards and rules of the PCAOB and the SEC.
36
Audit and Non-Audit Fee Table
The following table presents the aggregate fees for professional audit services rendered for the integrated audits of our annual
financial statements for the years ended December 31, 2016 and 2015, for the reviews of the financial statements included in our Quarterly
Reports on Form 10-Q for those fiscal years, if applicable, and for the testing of our internal control over financial reporting pursuant to
Section 404(a) of the Sarbanes-Oxley Act of 2002, and fees billed for other services rendered during those periods.
Audit fees (1)
Audit - related fees (2)
Tax fees (3)
All other fees
Total
2016
2015
$
$
52,500 $
9,750
16,250
—
78,500 $
29,000
1,500
10,750
6,250
47,500
(1)
(2)
(3)
Audit fees consist of services rendered for the audit of our annual financial statements and other financial disclosures, audit of our
internal control over financial reporting, review of the consolidated financial statements included in our Form 10-Q filings,
consents issued related to registration statements and issuance of comfort letters.
Audit-related fees represent professional fees for accounting consultation and other attest engagements.
Tax fees represent professional services rendered for tax compliance, tax advice and tax planning.
Audit Committee Pre-Approval of Services by the Independent Registered Public Accounting Firm
In accordance with its charter and applicable rules and regulations adopted by the SEC, the Company’s Audit Committee reviews
and pre-approves any engagement of the independent registered public accounting firm to provide audit, review or attest services or non-
audit services and the fees for any such services. The Audit Committee annually considers and, if appropriate, approves the provision of
audit services by the independent registered public accounting firm. In addition, the Audit Committee periodically considers and, if
appropriate, approves the provision of any additional audit and non-audit services by our independent registered public accounting firm that
are neither pre-approved by the Audit Committee on an annual basis nor prohibited by applicable rules and regulations of the SEC. The
Audit Committee has delegated to the chairman of the Audit Committee, Mr. Zachary, the authority to pre-approve, on a case-by-case
basis, any such additional audit and non-audit services to be performed by our independent registered public accounting firm. Mr. Zachary
reports any decision to pre-approve such services to the Audit Committee at its next regular meeting. All of the fees described in the table
above were pre-approved by the Audit Committee.
37
Item 15.
Exhibits, Financial Statement Schedules.
(a) Documents filed as part of this report:
1. Financial Statements.
PART IV
(1) and (2). All Financial Statements and Financial Statement Schedules filed as part of this Annual Report on 10-K
are included in Part II, Item 8—“Financial Statements and Supplementary Data” of this Annual Report on 10-K and reference
is made thereto.
(3) The list of exhibits filed with this annual report is set forth in response to Item 15(b).
(b) Exhibits. The following documents are filed or incorporated by references as exhibits to this report:
Exhibit
Item
Number and Description
Incorporated by Reference to
Filed Herewith
3.1.1.
Articles of incorporation
3.1.2.
Articles of amendment
3.1.3.
Articles supplementary
3.1.4.
Articles of amendment
3.1.5.
Articles supplementary
3.1.6.
Articles of amendment
3.2.
Amended and Restated Bylaws
Rights Agreement
4.1
4.2
10.1
10.2
10.3
Company's registration statement filing on Form N-2, File
Nos. 333-46765 and 811-08025, as filed with the SEC on
January 23, 1997.
Company's registration statement filing on Form N-2, File
No. 811-08025, as filed with the SEC on December 10,
2003.
Company's registration statement filing on Form N-2, File
No. 811-08025, as filed with the SEC on December 10,
2003.
Company's filing on Form 10, File No. 001-12681, as filed
with the SEC on June 30, 2015.
Company's filing on Form 8-K, File No. 001-12681, as
filed with the SEC on January 22, 2016.
Company's filing on Form 8-K, File No. 001-12681, as
filed with the SEC on January 22, 2016.
Company's filing on Form 8-K, File No. 001-12681, as
filed with the SEC on January 22, 2016.
Company's filing on Form 8-K, File No. 001-12681, as
filed with the SEC on February 2, 2016.
Form of Registration Rights Agreement by and between the
Company and Tuxis
Company's filing on Form 8-K, File No. 001-12681, as
filed with the SEC on November 30, 2016.
Guaranty dated June 24, 2016 by Global Self Storage, Inc.
in favor of Insurance Strategy Funding IV, LLC
Company's filing on Form 8-K, File No. 001-12681, as
filed with the SEC on June 30, 2016.
Loan Agreement dated June 24, 2016 between certain
subsidiaries of Global Self Storage, Inc. and Insurance
Strategy Funding IV, LLC
Promissory Note dated June 24, 2016 between certain
subsidiaries of Global Self Storage, Inc. and Insurance
Strategy Funding IV, LLC
Company's filing on Form 8-K, File No. 001-12681, as
filed with the SEC on June 30, 2016.
Company's filing on Form 8-K, File No. 001-12681, as
filed with the SEC on June 30, 2016.
38
Exhibit
Item
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11+
21.1
24.1
31.1
31.2
32.1
32.2
Number and Description
Incorporated by Reference to
Filed Herewith
Form of Mortgage, Assignment of Leases and Rents and
Security Agreement
Company's filing on Form 8-K, File No. 001-12681, as
filed with the SEC on June 30, 2016.
Agreement for Sale and Purchase dated May 9, 2016
between Gray Eagle Development, LLP and a subsidiary of
Global Self Storage, Inc. to acquire a storage facility located
in Fishers, Indiana (“Indiana Purchase Agreement”)
Company's filing on Form 10-Q, File No. 001-12681, as
filed with the SEC on August 15, 2016.
Letter Amendment dated June 22, 2016 to the Indiana
Purchase Agreement
Company's filing on Form 10-Q, File No. 001-12681, as
filed with the SEC on August 15, 2016.
Agreement for Sale and Purchase dated June 27, 2016
between West Robb Ave., LLC and a subsidiary of Global
Self Storage, Inc. to acquire a storage facility located in
Lima, Ohio
Company's filing on Form 10-Q, File No. 001-12681, as
filed with the SEC on August 15, 2016.
Letter Amendment dated July 21, 2016 to the Indiana
Purchase Agreement
Company's filing on Form 10-Q, File No. 001-12681, as
filed with the SEC on August 15, 2016.
Letter Amendment dated August 10, 2016 to the Indiana
Purchase Agreement
Company's filing on Form 10-Q, File No. 001-12681, as
filed with the SEC on August 15, 2016.
Purchase Agreement by and between the Company and
Tuxis, dated as of November 23, 2016
Company's filing on Form 8-K, File No. 001-12681, as
filed with the SEC on November 30, 2016.
Employment Agreement between Mark C. Winmill and the
Company dated July 1, 2015
Company's filing on Form 10, File No. 001-12681, as filed
with the SEC on June 30, 2015.
Subsidiaries of the Company
Powers of Attorney
Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
101.
Interactive Data Files1
X
X
X
X
X
X
X
+ Indicates management contract or compensation plan or arrangement.
1 Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed to be furnished and not filed for
purposes of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under this section, and shall not be
incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except
as expressly set forth by specific reference to those documents.
39
Item 16.
Form 10-K Summary.
Not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 31, 2017
Date: March 31, 2017
GLOBAL SELF STORAGE, INC.
/s/ Mark C. Winmill
By: Mark C. Winmill, President
(Signing on behalf of the registrant as Principal Executive
Officer)
/s/ Thomas O’Malley
By: Thomas O’Malley, Chief Financial Officer
(Signing on behalf of the registrant as Principal Financial
Officer and Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
Date: March 31, 2017
Date: March 31, 2017
Date: March 31, 2017
Directors: Russell E. Burke III, George B. Langa, and William C. Zachary
By: /s/ John Ramirez
John Ramirez
Attorney-In-Fact*
/s/ Mark C. Winmill
By: Mark C. Winmill, President and Director
(Principal Executive Officer)
/s/ Thomas O’Malley
By: Thomas O’Malley, Chief Financial Officer
(Principal Financial Officer and Principal Accounting
Officer)
/s/ Thomas B. Winmill
By: Thomas B. Winmill, Director
Date: March 31, 2017
*Pursuant to authority granted by powers of attorney, copies of which are filed herewith.
40
Global Self Storage, Inc.
Financial Statements
Table of Contents
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheet as of December 31, 2016
Statement of Assets and Liabilities (Predecessor Basis) as of December 31, 2015
Consolidated Statement of Operations (Successor Basis) for the period January 19, 2016 through
December 31, 2016
Statement of Operations (Predecessor Basis) for the period January 1, 2016 through January 18, 2016
Consolidated Statement of Comprehensive Loss (Successor Basis) for the period January 19, 2016 through
December 31, 2016
Statement of Operations (Predecessor Basis) for the year ended December 31, 2015
Consolidated Statement of Stockholders’ Equity for the period January 19, 2016 through
December 31, 2016
Consolidated Statement of Cash Flows (Successor Basis) for the period January 19, 2016 through
December 31, 2016
Statement of Cash Flows (Predecessor Basis) for the period January 1, 2016 through January 18, 2016
Statement of Cash Flows (Predecessor Basis) for the year ended December 31, 2015
Schedule of Portfolio Investments as of December 31, 2015
Notes to consolidated financial statements
F-1
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-9
F-11
F-12
F-13
F-14
F-15
Report of Independent Registered Public Accounting Firm
Audit Committee of the Board of Directors
Global Self Storage, Inc.
New York, New York
We have audited the accompanying consolidated balance sheet (successor basis) of Global Self Storage, Inc. as of December 31, 2016 and
the related consolidated statements (successor basis) of operations, comprehensive loss, stockholders’ equity and cash flows for the period
January 19, 2016 through December 31, 2016, the statements (predecessor basis) of operations, changes in net assets, and cash flows for
the period January 1, 2016 through January 18, 2016, and the statement of assets and liabilities (predecessor basis) of Global Self Storage,
Inc. including the schedule of portfolio investments as of December 31, 2015 and the related statements (predecessor basis) of operations,
changes in net assets, and cash flows for the year then ended. In connection with our audits of the consolidated financial statements, we
have also audited financial statement Schedule III. Global Self Storage, Inc.’s management is responsible for these financial statements and
financial statement Schedule III. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position (successor basis) of
Global Self Storage, Inc. as of December 31, 2016, and the results (successor basis) of its operations and its cash flows for the period
January 19, 2016 through December 31, 2016, the results of its operations, changes in net assets, and its cash flows for the period January 1,
2016 through January 18, 2016 (predecessor basis), and the financial position (predecessor basis) of Global Self Storage, Inc. as of
December 31, 2015 and the results of its operations, changes in net assets, and its cash flows for the year then ended (predecessor basis) in
conformity with accounting principles generally accepted in the United States of America. Also, in our opinion the related financial
statement schedule when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
Philadelphia, Pennsylvania
March 30, 2017
F-2
TAIT, WELLER & BAKER LLP
GLOBAL SELF STORAGE, INC.
CONSOLIDATED BALANCE SHEET (Successor Basis)
December 31, 2016
Assets
Real estate assets, net
Cash and cash equivalents
Restricted cash
Investments in securities
Accounts receivable
Prepaid expenses and other assets
Intangible assets, net
Goodwill
Total assets
Liabilities and equity
Note payable
Accounts payable and accrued expenses
Total liabilities
Commitments and contingencies
Equity
Common stock, $0.01 par value, 19,900,000 shares authorized; 7,619,469 issued and
outstanding
Series A participating preferred stock, $0.01 par value, 100,000 shares authorized:
zero shares issued and outstanding
Additional paid in capital
Accumulated comprehensive income
Retained earnings
Total equity
Total liabilities and equity
See notes to consolidated financial statements.
F-3
$
$
$
$
55,775,068
2,911,640
54,054
1,473,950
157,607
265,045
317,140
694,121
61,648,625
19,374,971
1,723,458
21,098,429
76,195
—
33,881,863
718,463
5,873,675
40,550,196
61,648,625
GLOBAL SELF STORAGE, INC.
STATEMENT OF ASSETS AND LIABILITIES (Predecessor Basis)
December 31, 2015
Assets
Investments, at value
Wholly owned subsidiaries (cost $27,749,573)
Unaffiliated issuers (cost $5,974,192)
Cash
Dividends receivable
Other assets
Total assets
Liabilities
Accounts payable and accrued expenses
Due to affiliates
Total liabilities
Net Assets
Net Asset Value Per Share
(applicable to 7,416,766 shares outstanding: 20,000,000 shares of $.01 par value
authorized)
Net Assets Consist of
Paid in capital
Undistributed net investment income
Net unrealized appreciation on investments
See notes to consolidated financial statements.
F-4
$
$
$
$
$
34,624,573
7,809,137
42,433,710
29,763
14,403
12,320
42,490,196
139,025
64,649
203,674
42,286,522
5.70
32,983,056
593,521
8,709,945
42,286,522
GLOBAL SELF STORAGE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Successor Basis)
For the Period January 19, 2016 through December 31, 2016
Revenues
Rental income
Other property related income
Total revenues
Expenses
Property operations
General and administrative
Depreciation and amortization
Business development and property acquisition costs
Total expenses
Operating income
Other income (expense)
Dividend and interest income
Realized gain on investment securities
Interest expense
Total other income, net
Net income
Earnings per share - basic and diluted
Weighted average shares outstanding - basic and diluted
See notes to consolidated financial statements.
F-5
$
$
$
4,816,835
159,529
4,976,364
2,101,976
1,406,441
952,507
449,738
4,910,662
65,702
172,724
602,428
(456,719 )
318,433
384,135
0.05
7,417,320
GLOBAL SELF STORAGE, INC.
STATEMENT OF OPERATIONS (Predecessor Basis)
For the Period January 1, 2016 through January 18, 2016
Investment Income
Dividends
Unaffiliated issuers
Total investment income
Expenses
Compensation and benefits
Auditing
Occupancy and other office expenses
Directors
Bookkeeping and pricing
Custodian
Insurance
Transfer agent
Stockholder communications
Registration
Total expenses
Net investment loss
Realized and Unrealized Gain (Loss)
Net unrealized depreciation unaffiliated issuers
Net unrealized loss
$
5,165
5,165
39,109
6,570
4,091
2,070
1,440
720
720
630
360
77
55,787
(50,622 )
(22,605 )
(22,605 )
Net decrease in net assets resulting from operations
$
(73,227 )
See notes to consolidated financial statements.
F-6
GLOBAL SELF STORAGE, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (Successor Basis)
For the Period January 19, 2016 through December 31, 2016
Net income
Other comprehensive income (loss)
Unrealized loss on investment securities available-for-sale
Comprehensive loss
See notes to consolidated financial statements.
F-7
$
$
384,135
(1,093,877 )
(709,742 )
GLOBAL SELF STORAGE, INC.
STATEMENT OF OPERATIONS (Predecessor Basis)
Year Ended December 31, 2015
Investment Income
Dividends
Wholly owned subsidiaries
Unaffiliated issuers
Total investment income
Expenses
Compensation and benefits
Occupancy and other office expenses
Bookkeeping and pricing
Registration
Auditing
Directors
Stockholder communications
Legal
Custodian
Insurance
Transfer agent
Other
Total expenses
Net investment income
Realized and Unrealized Gain (Loss)
Net realized gain on investments in unaffiliated issuers
Net unrealized appreciation
Wholly owned subsidiaries
Unaffiliated issuers
Net realized and unrealized gain
Net increase in net assets resulting from operations
See notes to consolidated financial statements.
F-8
$
$
2,600,000
131,431
2,731,431
757,213
125,259
79,005
62,956
48,140
38,505
21,992
19,600
12,080
11,790
11,430
3,798
1,191,768
1,539,663
903,061
3,320,002
351,247
4,574,310
6,113,973
GLOBAL SELF STORAGE, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Successor Basis)
For the Period January 19, 2016 through December 31, 2016
Net assets to allocate to stockholders' equity at January 18, 2016
$
42,213,295
Common stock, par value
Allocated balance as of January 18, 2016; 7,416,766 shares, $0.01 par value
(Predecessor Basis)
Restricted stock issued in conjunction with acquisitions; 202,703 shares, $0.01 par value
Balance as of December 31, 2016 (7,619,469 shares, $0.01 par value)
Paid in capital
Allocated balance as of January 18, 2016 (Predecessor Basis)
Restricted stock issued in conjunction with acquisitions; 202,703 shares, $0.01 par value
Balance as of December 31, 2016
Accumulated other comprehensive income
Unrealized gain on available-for-sale securities as of January 18, 2016
(Predecessor Basis)
Unrealized loss on available-for-sale securities
Balance as of December 31, 2016
Retained earnings
Allocated balance as of January 18, 2016 (Predecessor Basis)
Reclassification of unrealized gain on available for sale securities (Predecessor Basis)
Transitional adjustment for net unrealized gain of wholly owned subsidiaries
(Predecessor Basis)
Adjustment of wholly owned subsidiaries on the effective date of the change in status
Combined accumulated deficit of wholly owned subsidiaries prior to the change in status
Net income
Dividends
Balance as of December 31, 2016
74,168
2,027
76,195
32,908,888
972,975
33,881,863
1,812,340
(1,093,877 )
718,463
9,230,239
(1,812,340 )
(6,875,000 )
7,967,086
(1,092,086 )
384,135
(1,928,359 )
5,873,675
Total stockholders' equity as of December 31, 2016
$
40,550,196
See notes to consolidated financial statements.
F-9
GLOBAL SELF STORAGE, INC.
STATEMENTS OF CHANGES IN NET ASSETS (Predecessor Basis)
Operations
Net investment income (loss)
Net realized gain
Unrealized appreciation (depreciation)
Net increase (decrease) in net assets resulting from operations
Distributions to Stockholders
Net investment income
Net realized gains
Return of capital
Total distributions
Total increase (decrease) in net assets
Net Assets
Beginning of period
End of period
End of period net assets include undistributed net investment income
See notes to consolidated financial statements.
F-10
For the Period
January 1, 2016 to
January 18, 2016
Year Ended
December 31,
2015
$
$
$
(50,622 ) $
—
(22,605 )
(73,227 )
—
—
—
—
(73,227 )
42,286,522
42,213,295 $
1,539,663
903,061
3,671,249
6,113,973
(848,415 )
(903,061 )
(176,883 )
(1,928,359 )
4,185,614
38,100,908
42,286,522
542,899 $
593,521
GLOBAL SELF STORAGE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (Successor Basis)
For the Period January 19, 2016 through December 31, 2016
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by (used in) operating activities
$
384,135
Depreciation and amortization
Amortization of loan procurement costs
Cash from wholly owned subsidiaries consolidated upon change of status
Realized gain from sale of investment securities
Changes in operating assets and liabilities:
Restricted cash
Accounts receivable
Prepaid expenses and other assets
Accounts payable and accrued expenses
Net cash provided by operating activities
Cash flows from investing activities
Acquisition of self storage facilities
Proceeds from sale of investments
Construction
Improvements and equipment additions
Net cash used in investing activities
Cash flows from financing activities
Proceeds from note payable, net
Dividends paid
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents, January 18, 2016
Cash and cash equivalents, December 31, 2016
Supplemental schedule of cash flow information
Interest paid
Supplemental schedule of noncash investing and financing activities
Acquisitions of real estate assets:
Real estate assets, net
Accounts payable and accrued expenses
Common stock and paid in capital
See notes to consolidated financial statements.
F-11
952,507
21,217
464,586
(602,428 )
(54,054 )
15,416
(47,295 )
174,196
1,308,280
(18,924,998 )
5,724,686
(2,470,685 )
(180,801 )
(15,851,798 )
19,353,754
(1,928,359 )
17,425,395
2,881,877
29,763
2,911,640
435,502
1,875,002
(900,000 )
(975,002 )
$
$
$
GLOBAL SELF STORAGE, INC.
STATEMENT OF CASH FLOWS (Predecessor Basis)
For the Period January 1, 2016 through January 18, 2016
Cash Flows From Operating Activities
Net decrease in net assets resulting from operations
Adjustments to reconcile decrease in net assets resulting from operations to net cash
provided by (used in) operating activities:
Unrealized depreciation of investments
Net sales of short term investments
Decrease in dividends receivable
Decrease in other assets
Decrease in accrued expenses
Increase in due to affiliates
Net cash provided by operating activities
Cash
Beginning of period, December 31, 2015
End of period, January 18, 2016
See notes to consolidated financial statements.
F-12
$
(73,227 )
22,605
96,448
9,232
715
(69,986 )
14,213
—
29,763
29,763
$
GLOBAL SELF STORAGE, INC.
STATEMENT OF CASH FLOWS (Predecessor Basis)
Year Ended December 31, 2015
Cash Flows From Operating Activities
Net increase in net assets resulting from operations
Adjustments to reconcile increase in net assets resulting from operations to net cash
provided by (used in) operating activities:
Unrealized appreciation of investments
Net realized gain on sales of investment securities
Capital invested in wholly owned subsidiaries
Proceeds from sales of investment securities
Net purchases of short term investments
Decrease in due from subsidiaries
Increase in dividends receivable
Increase in other assets
Increase in accounts payable and accrued expenses
Increase in due to affiliates
Net cash provided by operating activities
Cash Flows from Financing Activities
Cash distributions paid
Net cash used in financing activities
Net change in cash
Cash
Beginning of period, December 31, 2014
End of period, December 31, 2015
See notes to consolidated financial statements.
$
F-13
$
6,113,973
(3,671,249 )
(903,061 )
(474,573 )
933,999
(105,144 )
3,372
(1,201 )
(2,125 )
13,802
20,575
1,928,368
(1,928,359 )
(1,928,359 )
9
29,754
29,763
GLOBAL SELF STORAGE, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 2015
Member
Equity Interest
WHOLLY OWNED SUBSIDIARIES (81.88%)
Real Estate Owned (81.82%)
Self Storage Properties (81.82%)
100 % SSG Bolingbrook LLC (a) (b)
100 % SSG Dolton LLC (a) (b)
100 % SSG Merrillville LLC (a) (b)
100 % SSG Rochester LLC (a) (b)
100 % SSG Sadsbury LLC (a) (b)
100 % SSG Summerville I LLC (a) (b)
100 % SSG Summerville II LLC (a) (b)
Total real estate owned (Cost $27,725,000)
Other (0.06%)
100 % SSG Operations LLC (a) (b) (Cost $24,573)
Shares
2,700
24,000
12,000
6,000
15,000
15,000
15,000
Total wholly owned subsidiaries (Cost $27,749,573)
COMMON STOCKS (7.34%)
Real Estate Investment Trusts (7.34%)
Diversified (1.58%)
Public Storage
Industrial (5.76%)
CubeSmart
Extra Space Storage, Inc.
Sovran Self Storage, Inc.
Total common stocks (Cost $ 1,360,102)
PREFERRED STOCKS (2.79%)
Real Estate Investment Trusts (2.79%)
Industrial (0.93%)
CubeSmart 7.75%, Series A
Retail (1.86%)
Pennsylvania Real Estate Investment Trust, 8.25%, Series A
Realty Income Corp., 6.625%, Series F
2
3,526,337
Total preferred stocks (Cost $1,087,753)
OTHER (0%)
RMR Asia Pacific Fund Fractional shares (b) (Cost $0)
SHORT TERM INVESTMENT (8.34%)
SSgA Money Market Fund, 7 day annualized yield 0.01% (Cost $3,526,337)
Total investments (Cost $33,723,765) (100.35%)
Liabilities in excess of other assets (-0.35%)
Net assets (100.00%)
(a)
(b)
Controlled affiliate.
Illiquid and/or restricted security that has been fair valued.
See notes to consolidated financial statements.
F-14
Value
6,100,000
5,900,000
5,700,000
5,950,000
5,700,000
3,400,000
1,850,000
34,600,000
24,573
34,624,573
668,790
734,880
1,058,520
643,860
2,437,260
3,106,050
392,250
387,150
397,350
784,500
1,176,750
0
3,526,337
42,433,710
(147,188 )
42,286,522
$
$
GLOBAL SELF STORAGE, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Global Self Storage, Inc. (the “Company”) is a self-administered and self-managed REIT, formed as a Maryland corporation and is
focused on the ownership, operation, acquisition, development and redevelopment of self storage facilities (“stores”). The Company’s
stores are located in the Northeast, Mid-Atlantic and Mid-West regions of the United States. The Company was formerly registered under
the Investment Company Act of 1940, as amended (the “1940 Act”) as a non-diversified, closed end management investment company.
The Securities and Exchange Commission’s (“SEC”) order approving the Company’s application to deregister from the 1940 Act was
granted on January 19, 2016. Accordingly, effective January 19, 2016, the Company changed its name to Global Self Storage, Inc. from
Self Storage Group, Inc., changed its SEC registration to a reporting company under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) from an investment company under the 1940 Act, and listed its common stock on the Nasdaq Capital Market
(“NASDAQ”) under the symbol “SELF”.
The Company has elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended (the “IRC”). To the extent
the Company continues to qualify as a REIT, it will not be subject to tax, with certain limited exceptions, on the taxable income that is
distributed to its stockholders.
The Company invests in self storage facilities by acquiring stores through its wholly owned subsidiaries. At December 31, 2016, the
Company owned and operated 11 stores. The Company operates primarily in one segment: rental operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Upon deregistration as an investment company, the Company's status changed to an operating company from an investment
company since it no longer met the assessment of an investment company under the Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification Topic 946 (“ASC 946”). The Company discontinued applying the guidance in ASC 946 and began to
account for the change in status prospectively by accounting for its investments in accordance with other U.S. generally accepted
accounting principles (“GAAP”) topics as of the date of the change in status.
The Company financial statements for the period subsequent to the deregistration are prepared on a consolidated basis to include the
financial position, results of operations, and cash flows of the Company and its wholly-owned subsidiaries, rather than by the investment
company fair valuation approach. This change in status and the concomitant accounting policies affect the comparability of the financial
statements for directly presenting corresponding items for 2016 and 2015. As such, for the year ended December 31, 2016, the
consolidated statements of operations and cash flows have been presented on the Predecessor Basis of accounting as an investment
company from January 1, 2016 through January 18, 2016, and on the current basis of accounting as a REIT from January 19, 2016 through
December 31, 2016. Similarly, separate statements of operations and cash flows are presented on the Predecessor Basis of accounting as an
investment company for the periods ended December 31, 2015. The consolidated balance sheet at December 31, 2016 has been presented
on the successor basis of accounting as a REIT and at December 31, 2015 the statement of assets and liabilities has been presented on the
Predecessor Basis of accounting as an investment company.
The consolidated financial statements of the Company are presented on the accrual basis of accounting in accordance with GAAP
and include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have
been eliminated in consolidation. The statement of assets and liabilities as of December 31, 2015 has been derived from the Company’s
audited financial statements as of that date, but does not include all of the information and footnotes required by GAAP for complete
financial statements. For further information refer to the financial statements and footnotes thereto included in the Company’s Annual
Report on Form N-CSR for the year ended December 31, 2015, as filed with the SEC.
F-15
Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses primarily consist of property tax accruals, unearned rental income, and trade payables.
Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid investments, and may include money market fund shares, purchased with an
original maturity of three months or less. The carrying amount reported on the balance sheet for cash and cash equivalents approximates
fair value.
Restricted Cash
Restricted cash is comprised of escrowed funds deposited with a bank relating to capital expenditures.
Income Taxes
The Company has elected to be treated as a REIT under the IRC. In order to maintain its qualification as a REIT, among other
things, the Company is required to distribute at least 90% of its REIT taxable income to its stockholders and meet certain tests regarding the
nature of its income and assets. As a REIT, the Company is not subject to federal income tax with respect to that portion of its income
which meets certain criteria and is distributed annually to stockholders. The Company plans to continue to operate so that it meets the
requirements for taxation as a REIT. Many of these requirements, however, are highly technical and complex. If the Company were to fail
to meet these requirements, it would be subject to federal income tax. The Company is subject to certain state and local taxes.
The Company recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained
assuming examination by tax authorities. The Company has reviewed its tax positions and has concluded that no liability for unrecognized
tax benefits should be recorded related to uncertain tax positions taken on federal, state, and local income tax returns for open tax years
(2013 – 2015), or is expected to be taken in the Company’s 2016 tax returns.
Investments in Securities
Investments in equity securities that have readily determinable fair values are accounted for as available-for-sale. Available-for-sale
securities are measured at fair value. Gains or losses from changes in the fair value of available-for-sale securities are recorded in
accumulated other comprehensive income, until the investment is sold or otherwise disposed of, or until the investment is determined to be
other-than-temporarily impaired, at which time the cumulative gain or loss previously reported in equity is included in income. The specific
identification method is used to determine the realized gain or loss on investments sold or otherwise disposed.
Fair value is determined using a valuation hierarchy generally by reference to an active trading market, using quoted closing or bid
prices. Judgment is used to ascertain if a formerly active market has become inactive and in determining fair values when markets have
become inactive.
Prior to January 19, 2016, gains and losses from the changes in fair value of investment securities were recorded in the Statement of
Operations.
F-16
Real Estate Assets
Real estate assets are carried at the appreciated value as of January 19, 2016, the effective date of the change in status. Purchases
subsequent to the effective date of the change in status are carried at cost, less accumulated depreciation. Direct and allowable internal costs
associated with the development, construction, renovation, and improvement of real estate assets are capitalized. Property taxes and other
costs associated with development incurred during the construction period are capitalized. The construction period begins when
expenditures for the real estate assets have been made and activities that are necessary to prepare the asset for its intended use are in
progress. The construction period ends when the asset is substantially complete and ready for its intended use.
We allocate the net acquisition cost of acquired operating self-storage facilities to the underlying land, buildings, identified
intangible assets, and any noncontrolling interests that remain outstanding based upon their respective individual estimated fair
values. Any difference between the net acquisition cost and the estimated fair value of the net tangible and intangible assets acquired is
recorded as goodwill.
Internal and external transaction costs associated with acquisitions or dispositions of real estate, as well as repairs and maintenance
costs, are charged to expense as incurred. Major replacements and betterments that improve or extend the life of the asset are capitalized
and depreciated over their estimated useful lives. Depreciation is computed using the straight-line method over the estimated useful lives of
the buildings and improvements, which are generally between 5 and 39 years.
Revenue and Expense Recognition
Revenues from stores, which are primarily composed of rental income earned pursuant to month-to-month leases for storage space,
as well as associated late charges and administrative fees, are recognized as earned. Promotional discounts reduce rental income over the
promotional period. Ancillary revenues from sales of merchandise and tenant insurance and other income are recognized when earned.
The Company accrues for property tax expense based upon actual amounts billed and, in some circumstances, estimates and
historical trends when bills or assessments have not been received from the taxing authorities or such bills and assessments are in dispute.
Cost of operations and general and administrative expense are expensed as incurred.
Credit Risk
Financial assets that are exposed to credit risk consist primarily of cash and cash equivalents and certain portions of accounts
receivable including rents receivable from our tenants. Cash and cash equivalents are on deposit with highly rated commercial banks.
Evaluation of Asset Impairment
The Company evaluates its real estate assets, intangible assets consisting of in-place lease, and goodwill for impairment annually. If
there are indicators of impairment and we determine that the asset is not recoverable from future undiscounted cash flows to be received
through the asset’s remaining life (or, if earlier, the expected disposal date), we record an impairment charge to the extent the carrying
amount exceeds the asset’s estimated fair value or net proceeds from expected disposal.
Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from management’s
estimates.
F-17
Recently Issued Accounting Standards
In August 2016, the FASB issued ASU No. 2016-15 - Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts
and Cash Payments, which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash
flows. The eight items that the ASU provides classification guidance on include (1) debt prepayment and extinguishment costs, (2)
settlement of zerocoupon debt instruments, (3) contingent consideration payments made after a business combination, (4) proceeds from
the settlement of insurance claims, (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life
insurance policies, (6) distributions received from equity method investments, (7) beneficial interests in securitization transactions, and (8)
separately identifiable cash flows and application of the predominance principle. The standard is effective on January 1, 2018, however
early adoption is permitted. The standard requires the use of the retrospective transition method. The Company is in the process of
evaluating the impact of this new guidance.
In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee
Share-Based Payment Accounting, which is intended to simplify various aspects related to how share-based payments are accounted for and
presented in the financial statements. The new guidance allows for entities to make an entity-wide accounting policy election to either
estimate the number of awards that are expected to vest or account for forfeitures when they occur. In addition, the guidance allows
employers to withhold shares to satisfy minimum statutory tax withholding requirements up to the employees’ maximum individual tax
rate without causing the award to be classified as a liability. The guidance also stipulates that cash paid by an employer to a taxing authority
when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows.
The standard is effective on January 1, 2017, however early adoption is permitted. The Company is in the process of evaluating the impact
of this new guidance.
In February 2016, the FASB issued ASU No. 2016-02 - Leases (Topic 842), which sets out the principles for the recognition,
measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires
lessees to apply a dual approach, classifying leases as either financing or operating leases based on the principle of whether or not the lease
is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an
effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use
asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12
months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account
for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating
leases. The standard is effective on January 1, 2019, however early adoption is permitted. The Company is in the process of evaluating the
impact of this new guidance.
In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, which
amends the current business combination guidance to require that an acquirer recognize adjustments to provisional amounts that are
identified during the measurement period in the reporting period in which the adjustment amounts are determined, as opposed to having to
revise prior period information. The standard also requires additional disclosure about the impact on current-period income statement line
items of adjustments that would have been recognized in prior periods if prior period information had been revised. The new standard
became effective for the Company on January 1, 2016. The adoption of this guidance did not have a material impact on the Company’s
consolidated financial position or results of operations as there have been no measurement-period adjustments recorded.
In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, an update to the accounting
standard relating to the presentation of debt issuance costs. Under the new guidance, debt issuance costs related to a recognized debt
liability will be presented on the balance sheet as a direct deduction from the debt liability. In the event that there is not an associated debt
liability recorded in the consolidated financial statements, the debt issuance costs will continue to be recorded on the consolidated balance
sheet as an asset until the debt liability is recorded. The new standard became effective for the Company on January 1, 2016. The adoption
of this guidance did not have a material impact on the Company’s consolidated financial position or results of operations as the update only
related to changes in financial statement presentation.
F-18
In August, 2014, the FASB issued new accounting guidance which is intended to define management's responsibility to evaluate
whether there is substantial doubt about an organization's ability to continue as a going concern for a period of one year after the date that
the financial statements are issued. This guidance is effective for annual periods ending after December 15, 2016 and interim periods within
annual periods beginning after December 15, 2016. Early adoption is permitted. The Company anticipates no impact upon adoption of the
new accounting guidance on its consolidated financial statements.
In February 2015, the FASB issued ASU No. 2015-02, Consolidation – Amendments to the Consolidation Analysis, which amends
the current consolidation guidance affecting both the variable interest entity (“VIE”) and voting interest entity (“VOE”) consolidation
models. The standard does not add or remove any of the characteristics in determining if an entity is a VIE or VOE, but rather enhances the
way the Company assesses some of these characteristics. The new standard became effective for the Company on January 1, 2016. As
discussed under Basis of Presentation above, the adoption of this guidance did not have a material impact on the Company’s consolidated
financial position or results of operations as none of its existing consolidation conclusions were changed.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize
the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace
most existing revenue recognition guidance under GAAP when it becomes effective. The new standard will be effective for the Company
beginning on January 1, 2018, however early application beginning on January 1, 2017 is permitted. The standard permits the use of either
the retrospective or cumulative effect transition method. The Company has not yet selected a transition method nor has it determined the
effect of the standard on its financial statements and related disclosures.
3. CHANGE IN STATUS
Prior to the January 19, 2016 change in status as a registered investment company, the Company recorded its investment in the self
storage facilities at fair value and recorded the changes in the fair value as an unrealized gain or loss. Upon the effective date of the
deregistration of the Company as a registered investment company, the fair value accounting as a registered investment company was no
longer applicable to the Company, rather the Company began presenting on a consolidated basis, the underlying assets and liabilities of the
self storage facilities. The Company’s initial carrying value of the net assets of the self storage properties was the fair value on the effective
date of the change in status determined as follows:
Fair value of self storage properties on the effective
date of the change in status
Total net assets of the combined self storage
properties
Property plant and equipment - self storage
Cash and cash equivalents
Accounts receivable
Prepaid expenses and other assets
Accounts payable and accrued expenses
Increase to the initial carrying value of the net assets
of the self storage properties on the effective date
of the change in status
F-19
$ 34,624,573
$ 26,388,167
464,585
87,103
206,146
(488,514 ) 26,657,487
$ 7,967,086
4. INVESTMENTS IN SECURITIES
Investments in securities as of December 31, 2016, consisted of the following:
Investment securities, available-for-sale
Common stocks
Cost Basis
Gains
Losses
Value
Gross Unrealized
$
755,487 $
718,463 $
— $ 1,473,950
Total investment in securities
$
755,487 $
718,463 $
— $ 1,473,950
During the year ended December 31, 2016, the Company recorded realized gains from the sale of available-for-sale securities of
$602,428. Proceeds from the sale of those securities was $2,294,796.
5. REAL ESTATE ASSETS
The carrying value of the Company’s real estate assets is summarized as follows:
Buildings, improvements, and equipment, at cost:
Beginning balance
Acquisition of self storage facilities
Newly developed facilities opened for operation
Improvements and equipment additions
Ending balance
Land
Beginning balance
Acquisition of self storage facilities
Ending balance
Accumulated depreciation:
Beginning balance
Depreciation expense
Ending balance
Construction in progress:
Beginning balance
Current development
Newly developed facilities opened for operation
Transfer to prepaid expenses and other assets
Ending balance
$ 30,795,900
17,612,576
2,567,424
180,801
51,156,701
3,413,814
2,080,000
5,493,814
—
(875,447 )
(875,447 )
145,539
2,470,685
(2,567,424 )
(48,800 )
—
Total real estate facilities at December 31, 2016
$ 55,775,068
The real estate assets as of December 31, 2016 have been adjusted to reflect the appreciated fair value of the self storage facilities as
of the date of the change in status from an investment company.
During 2016, the Company completed the construction to expand its Bolingbrook, IL store. The new development adds
approximately 44,260 leasable square feet of climate-controlled and traditional storage units, for an aggregate cost of approximately
$2,600,000.
F-20
6. ACQUISITIONS
The following table shows the Company’s acquisitions of operating stores for the year ended December 31, 2016, and does not
include purchases of construction or improvements made to existing assets:
Property Location
Ohio
Indiana
New York/
Connecticut
Totals
Number of
Stores
1
1
Date of
Acquisition
8/29/2016 $
9/26/2016
Total
5,300,000 $
7,700,000
Cash Paid
5,300,000 $
7,700,000
Common Stock
Issued
Contingent
Consideration
— $
—
—
—
Consideration Paid
2
4
12/30/2016
$
7,800,000
20,800,000 $
5,924,998
18,924,998 $
975,002
975,002 $
900,000
900,000
During the year ended December 31, 2016, the Company acquired 4 stores, including 2 stores from Tuxis Corporation (“Tuxis”), an
affiliate of the Company, for an aggregate purchase price of $20,800,000. Approximately $1,100,000 of the purchase price was allocated to
intangible assets. There were no acquisitions during the fiscal year 2015. The estimated life of in-place leases was 12 months and the
amortization expense that was recorded during the year ended December 31, 2016 was $77,060. The Company expensed professional
fees/closing costs of $449,738 in connection with these acquisitions.
The additional $900,000 cash payment to Tuxis is contingent upon the New York store receiving local permission to expand the
existing store and the commencement of construction.
The following table summarizes the revenues and earnings related to the 4 stores acquired during 2016 since their acquisition dates,
which are included in the Company’s consolidated statements of operations for the year ended December 31, 2016. There were no
acquisitions during 2015.
Total revenue
Net income
Pro Forma Financial Information
Year Ended
December 31,
2016
433,054
75,883
$
During the year ended December 31, 2016, the Company acquired 4 operating stores. The following pro forma financial
information includes all 4 stores acquired and reflects adjustments to the Company’s historical financial data to give effect to each of the
acquisitions that occurred during 2016 as if each had occurred as of January 19, 2016 to December 31, 2016. Pro forma financial
information has not been provided for 2015and for the period January 1, 2016 to January 18, 2016, since the Company was an investment
company and applied the accounting guidance in ASC 946. The unaudited pro forma information presented below does not purport to
represent what the Company’s actual results of operations would have been for the periods indicated, nor does it purport to represent the
Company’s future results of operations.
For the Period
January 19, 2016
to
December 31,
2016
6,881,146
1,116,895
0.05
0.15
$
$
$
$
Pro forma revenue
Pro forma net income
Basic and diluted per share net income - as reported
Basic and diluted per share net income - pro forma
F-21
7. FAIR VALUE MEASUREMENTS
GAAP establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy
prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets
or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or
liability, either directly or indirectly through market corroboration. Level 3 inputs are unobservable inputs based on our own assumptions
used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on
the lowest level input that is significant to the fair value measurement.
The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2016
and December 31, 2015:
December 31, 2016
Assets
Investment in securities
Total assets at fair value
December 31, 2015
Assets
Investments, at value
Wholly owned subsidiaries
Self storage facilities
Other
Common stocks
Preferred stocks
Other
Short term investments
Total assets at fair value
The following is a reconciliation of level 3 assets:
Balance at December 31, 2015
Transfer out of level 3 effective change in status
Balance at December 31, 2016
Level 1
Level 2
Level 3
Total
$ 1,473,950 $
$ 1,473,950 $
— $
— $
— $ 1,473,950
— $ 1,473,950
Level 1
Level 2
Level 3
Total
$
— $
—
3,106,050
1,176,750
—
3,526,337
$ 7,809,137 $
— $34,600,000 $34,600,000
24,573
—
24,573
— 3,106,050
—
— 1,176,750
—
—
—
—
—
— 3,526,337
— $34,624,573 $42,433,710
Wholly Owned Subsidiaries
$
$
34,624,573
(34,624,573 )
-
There were no assets transferred from level 1 to level 2 as of December 31, 2016 or December 31, 2015. The Company did not have
any assets or liabilities that are re-measured on a recurring basis using significant unobservable inputs as of December 31, 2016 or
December 31, 2015.
The fair values of financial instruments including cash and cash equivalents, restricted cash, accounts receivable, and accounts
payable approximated their respective carrying values as of December 31, 2016. The aggregate carrying value of the Company’s debt was
$20,000,000 as of December 31, 2016. The estimated fair value of the Company’s debt was $20,000,000 as of December 31, 2016. This
estimate was based on market interest rates for comparable obligations. Rates take into consideration general market conditions and
maturity. The Company’s debt is classified as level 2 of the fair value hierarchy.
8. NOTE PAYABLE
On June 24, 2016, certain wholly owned subsidiaries (the “Secured Subsidiaries”) of the Company entered into a loan agreement
(the “Loan Agreement”) borrowing the principal amount of $20 million pursuant to a promissory note (the “Promissory Note”). The
Promissory Note bears an interest rate equal to 4.192% per annum (effective interest rate 4.40%) and is due to mature on July 1, 2036.
Pursuant to a security agreement (the “Security
F-22
Agreement”), the obligations under the Loan Agreement are secured by certain real estate assets owned by the Secured Subsidiaries.
The Company entered into a non-recourse guaranty on June 24, 2016 (the “Guaranty,” and together with the Loan Agreement, the
Promissory Note and the Security Agreement, the “Loan Documents”) to guarantee the payment to Lender of certain obligations of the
Secured Subsidiaries under the Loan Agreement.
The Loan Documents require the Secured Subsidiaries and the Company to comply with certain covenants, including, among
others, a minimum net worth test and other customary covenants. The Lender may accelerate amounts outstanding under the Loan
Documents upon the occurrence of an Event of Default (as defined in the Loan Agreement) including, but not limited to, the failure to pay
amounts due or commencement of bankruptcy proceedings.
The Company incurred loan procurement costs of $646,246 and such costs have been recorded net of the note payable on the
consolidated balance sheet and are amortized as an adjustment to interest expense over the term of the loan.
As of December 31, 2016, the Company’s note payable is summarized as follows:
Note Payable
Principal balance outstanding
Less: Loan procurement costs, net
Total note payable, net
Carrying Value
$ 20,000,000
(625,029 )
$ 19,374,971
As of December 31, 2016, the note payable was secured by certain of its self storage facilities with an aggregate net book value of
approximately $36.3 million. The note payable pays interest only from August 1, 2016 through June 30, 2018. The following table
represents the future principal payment requirements on the note payable as of December 31, 2016:
2017
2018
2019
2020
2021
2022 and thereafter
Total principal payments
Less: Loan procurement costs, net
Total note payable
F-23
$
—
228,987
472,600
492,797
513,857
18,291,759
20,000,000
(625,029 )
$ 19,374,971
9. INVESTMENTS IN WHOLLY OWNED SUBSIDIARIES
The following summary sets forth the Company’s membership equity ownership including membership equity capital additions and
reductions, cash dividends received by the Company, and the value of each unconsolidated wholly owned subsidiary, predecessor basis, in
aggregate as recorded in the schedule of portfolio investments as of and for the year ended December 31, 2015.
Beginning
Equity Interest
Percentage
Membership Equity
Ending
Equity Interest
Gross
Gross
Additions Reductions Percentage
Dividend
Income
SSG Bolingbrook LLC
SSG Dolton LLC
SSG Merrillville LLC
SSG Rochester LLC
SSG Sadsbury LLC
SSG Summerville I LLC
SSG Summerville II LLC
SSG Operations LLC
— $
100 % $
—
100 %
—
100 %
100 %
—
100 % 450,000
—
100 %
—
100 %
24,573
100 %
$ 474,573 $
—
—
—
—
—
—
—
—
—
100 % $
100 %
100 %
100 %
100 %
100 %
100 %
100 %
$
Value
December 31, 2015
6,100,000
5,900,000
5,700,000
5,950,000
5,700,000
3,400,000
1,850,000
24,573
34,624,573
— $
—
—
—
—
—
—
—
— $
The following table sets forth unaudited summarized information as to assets, liabilities, and selected operating information for the
unconsolidated wholly subsidiaries in aggregate as of and for the year ended December 31, 2015:
Dollars in thousands
OPERATING DATA
Year ended December 31, 2015
Rental revenues
Costs of operations
Income from operations
Depreciation and amortization
Net income
BALANCE SHEET DATA
December 31, 2015
Real estate assets, net
Total assets
Total liabilities
$
$
$
$
$
$
$
4,439
1,801
2,638
636
1,950
26,428
26,965
403
10. EARNINGS PER SHARE
Basic earnings per share is computed using the weighted average number of shares outstanding. Diluted earnings per share is
computed using the weighted average number of shares outstanding adjusted for the incremental shares attributed to potentially diluted
securities. The following table sets forth the computation of basic and diluted earnings per share:
Net income
Basic and diluted weighted average common shares
outstanding
Basic and diluted per share net income
$
384,135
7,417,320
0.05
$
F-24
11. RELATED PARTY TRANSACTIONS
Certain officers and directors of the Company also serve as officers and directors of Winmill & Co. Incorporated (“Winco”), Bexil,
Tuxis, and their affiliates (collectively with the Company, the “Affiliates”). As of December 31, 2016, certain of the Affiliates owned
approximately 5% of the Company’s outstanding common stock. Pursuant to an arrangement between a professional employer organization
(“PEO”) and the Affiliates, the PEO provides payroll, benefits, compliance, and related services for employees of the Affiliates in
accordance with applicable rules and regulations under the IRC and, in connection therewith, Midas Management Corporation (“MMC”), a
subsidiary of Winco, acts as a conduit payer of compensation and benefits to the Affiliates’ employees including those who are
concurrently employed by the Company and its Affiliates. Rent expense of concurrently used office space and overhead expenses for
various concurrently used administrative and support functions incurred by the Affiliates are allocated at cost among them. The Affiliates
participate in a 401(k) retirement savings plan for substantially all qualified employees. A matching expense based upon a percentage of
contributions to the plan by eligible employees is incurred and allocated among the Affiliates. The matching expense is accrued and funded
on a current basis and may not exceed the amount permitted as a deductible expense under the IRC. The aggregate rent and overhead
accrued and paid by the Company to Winco for the years ended December 31, 2016 and 2015 was $69,599 and $62,403, respectively. The
Company had reimbursements payable to MMC and Winco for compensation and benefits and rent and overhead of $2,933 and $64,649 as
of December 31, 2016 and 2015, respectively.
The Company provides a maximum monthly automobile allowance of $1,000 per month to its President, Mark C. Winmill. To the
extent that the monthly maximum payment under the Company’s automobile lease exceeds the monthly allowance, Mr. Winmill must
reimburse the Company for the excess amount. In this regard, Mr. Winmill has reimbursed the Company $1,878 for each of the years
ended December 31, 2016 and 2015, respectively.
The Company leased office space from Tuxis under a rental agreement through December 30, 2016. For the years ended December
31, 2016 and 2015, the total rent paid by the Company to Tuxis was $12,000 and $14,000 respectively.
On December 30, 2016, the Company leased office space to Tuxis under a rental agreement. The terms of occupancy are month to
month and automatically renew unless terminated by either party on ten days’ written notice. The monthly rental charges are $1,000 per
month due and payable on the first day of each month.
12. CAPITAL STOCK
The Company is authorized to issue 19,900,000 shares of $0.01 par value common stock. The Company also has 100,000 shares of
Series A participating preferred stock, $0.01 par value, authorized, of which none has been issued.
On December 30, 2016 (the “Closing Date”), the Company issued 202,703 shares of common stock valued at $975,002 to Tuxis in
conjunction with the Tuxis Subsidiaries acquisition. The common stock issued is unregistered and therefore subject to certain restrictions.
The Company and Tuxis have entered into a Registration Rights Agreement, which permits Tuxis to request the registration of the
Company’s unregistered common stock.
F-25
13. STOCKHOLDER RIGHTS PLAN
On January 28, 2016, the Company announced that its Board of Directors has adopted a stockholders rights plan (the “Rights
Plan”). To implement the Rights Plan, the Board of Directors declared a dividend distribution of one right for each outstanding share of
Company common stock, par value $.01 per share, to holders of record of the shares of common stock at the close of business on January
29, 2016. Each right entitles the registered holder to purchase from the Company one one-thousandth of a share of preferred stock, par
value $.01 per share. The rights were distributed as a non-taxable dividend and will expire on January 29, 2026. The rights were evidenced
by the underlying Company common stock, and no separate preferred stock purchase rights certificates have been distributed. The rights to
acquire preferred stock are not immediately exercisable and will become exercisable only if a person or group, other than Exempt Persons
(as defined in the Rights Plan agreement), acquires or commences a tender offer for 9.8% or more of the Company’s common stock. If a
person or group, other than an Exempt Person, acquires or commences a tender offer for 9.8% or more of the Company’s common stock,
each holder of a right, except the acquirer, will be entitled, subject to the Company’s right to redeem or exchange the right, to exercise, at
an exercise price of $12, the right to purchase one one-thousandth of a share of the Company’s newly created Series A Participating
Preferred Stock, or the number of shares of Company common stock equal to the holder’s number of rights multiplied by the exercise price
and divided by 50% of the market price of the Company’s common stock on the date of the occurrence of such an event. The Company’s
Board of Directors may terminate the Rights Plan at any time or redeem the rights, for $0.01 per right, at any time before a person acquires
9.8% or more of the Company’s common stock. This Rights Plan replaced the Company’s stockholders rights plan dated November 25,
2015, which expired on its own terms on March 24, 2016.
14. COMMITMENTS AND CONTINGENCIES
The Company enters into contracts that contain a variety of representations and warranties and which may provide general
indemnifications. The Company’s maximum exposure under these arrangements is unknown as it involves future claims that may be made
against the Company under circumstances that have not occurred.
The Company leases an automobile under a lease expiring on January 3, 2020. The future minimum lease payments under the lease
in aggregate are $45,684 comprised of annual payments of $15,288 in each of the years ending December 31, 2017, 2018, and 2019,
respectively.
F-26
GLOBAL SELF STORAGE, INC.
SCHEDUEL III
REAL ESTATE AND RELATED DEPRECIATION
December 31, 2016
Initial cost
Gross Carrying Amount
at December 31, 2016
Description
Clinton, CT
Bolingbrook, IL
Dolton, IL
McCordsville, IN
Merrillville, IN
Millbrook, NY
Millbrook, NY
Rochester, NY
Lima, OH
Sadsburyville, PA
Summerville, SC
Summerville, SC
Costs
Subsequent
to
Buildings &
Square
Footage
31,059
110,600
86,725
81,471
71,720
13,391 (1)
1,875 (2)
68,017
97,801
79,004
72,700 (3)
41,608 (4)
755,971
Encumbrances
Buildings &
Land
Improvements
Accumulated
Depreciation
Year
Acquired
Acquisition
Land
Improvements
— $ 356,040 $ 3,108,285 $ 3,464,325 $
Total
211 2016
$ 356,040 $ 3,108,285 $
633,914 5,491,409 2,422,760 633,914 7,914,169 8,548,083 178,620 2013
9,611 614,413 5,236,924 5,851,337 141,594 2013
614,413 5,227,313
14,573 770,000 6,790,573 7,560,573
770,000 6,776,000
44,703 2016
94,605 597,229 5,198,616 5,795,845 133,910 2013
597,229 6,104,011
184 2016
313,950 2,723,468
— 313,950 2,723,468 3,037,418
— 110,010
110,010
60 2016
177,427
287,437
— 571,583 5,227,630 5,799,213 102,071 2012
571,583 5,227,630
530,000 4,664,000
39,867 2016
— 462,749 5,146,579 5,609,328 133,153 2012
462,749 5,146,679
63,506 2013
345,160 2,989,159
188,766 1,493,814
35,108 2013
$ 5,493,814 $ 49,129,195 $ 2,590,647 $ 5,493,814 $ 50,831,333 $ 56,325,147 $ 872,987
5,475 345,160 2,994,634 3,339,794
14,725 188,766 1,620,130 1,808,896
28,898 530,000 4,692,898 5,222,898
177,427
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(1)
(2)
(3)
(4)
This store is part of the Loan Agreement with at balance of $19,374,971 as of December 31, 2016.
Tuxis Self Storage I LLC.
Tuxis Real Estate II LLC, an adjacent property to Tuxis Self Storage I LLC.
SSG Summerville I LLC.
SSG Summerville II LLC.
Activity in storage properties during the period January 19, 2016 to December 31, 2016 was as follows:
Storage properties *
Balance at beginning of period
Acquisitions and improvements
Balance at end of period
Accumulated depreciation
Balance at beginning of period
Depreciation expense
Balance at end of period
Storage properties, net
$34,355,253.00
22,295,262
56,650,515
$
$
$
$
—
(875,447 )
(875,447 )
55,775,068
*
These amounts include equipment that is housed at the Company's stores which is excluded from Schedule III above.
F-27
EXHIBIT 21.1
Subsidiaries of the Company
Name
SSG Bolingbrook LLC
SSG Dolton LLC
SSG Fishers LLC
SSG Lima LLC
SSG Merrillville LLC
SSG Operations LLC
SSG Rochester LLC
SSG Sadsbury LLC
SSG Summerville I LLC
SSG Summerville II LLC
Tuxis Real Estate II LLC
Tuxis Self Storage I LLC
Tuxis Self Storage II LLC
Jurisdiction of Formation or Incorporation Doing Business As
Global Self Storage
Delaware
Global Self Storage
Delaware
Global Self Storage
Delaware
Global Self Storage
Delaware
Global Self Storage
Delaware
Global Self Storage
Delaware
Global Self Storage
Delaware
Global Self Storage
Delaware
Global Self Storage
Delaware
Global Self Storage
Delaware
N/A
New York
Global Self Storage
New York
Global Self Storage
New York
DURABLE POWER OF ATTORNEY
EXHIBIT 24.1
THIS is intended to constitute a DURABLE POWER OF ATTORNEY pursuant to Article 5, Title 15 of the New
York General Obligations Law:
I, Russell E. Burke, do hereby appoint each of Thomas B. Winmill, Mark C. Winmill, John F. Ramirez, and
Russell Kamerman, my attorneys-in-fact TO ACT SEPARATELY IN MY NAME, PLACE AND STEAD in any way
which I myself could do, if I were personally present, with respect to the following matters:
1.
2.
3.
execute for and on behalf of the undersigned, in the undersigned’s capacity as an individual, officer
and/or director of Global Self Storage, Inc. and any future company or other entity (“Companies”), Forms
3, 4, 5, Form 144, registration statements, proxy statements, forms and schedules, and all other documents
in accordance with all rules under the Securities Exchange Act of 1934, Securities Act of 1933 and all
other applicable law (the “Documents”);
do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable
to complete and execute any such Documents and file same with the United States Securities and
Exchange Commission and any stock exchange, clearing firm, registrar or transfer agent, as appropriate,
or similar authority, and
take any other action of any type whatsoever in connection with the foregoing which, in the opinion of
such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned,
it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned
pursuant to this Durable Power of Attorney shall be in such form and shall contain such terms and
conditions as such attorney-in-fact may approve in such attorney-in-fact’s discretion.
The undersigned hereby grants to each such attorney-in-fact full power and authority to do and perform any and
every act and thing whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers
herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full
power of substitution or revocation, hereby ratifying and confirming such attorney-in-fact, or such attorney-in-fact’s
substitute or substitute’s, shall lawfully do or cause to be done by virtue of this power of attorney and the rights and
powers herein granted. The undersigned hereby acknowledges that the foregoing attorneys-in-fact, in serving in such
capacity at the request of the undersigned, are not assuming, nor are the Companies assuming, any of the undersigned
responsibilities to comply with the rules of the Securities Exchange Act of 1934, the Securities Act of 1933 or any
other applicable law.
This Durable Power of Attorney shall not be affected by my subsequent disability or incompetence.
To induce any third party to act hereunder, I hereby agree that any third party receiving a duly executed copy
or facsimile of this instrument may act hereunder, and that revocation or termination hereof shall be ineffective
as to such third party unless and until actual notice or knowledge of such revocation or termination shall have
been received by such third party, and I for myself and my heirs, executors, legal representatives and assigns,
hereby agree to indemnify and hold harmless any such third party from and against any and all claims that may
arise against such third party by reason of such third party having relied on the provisions of this instrument.
This Durable Power of Attorney may be revoked by me at any time.
IN WITNESS WHEREOF, I have hereunto signed my name this 7 day of March, 2016.
/s/ Russell E. Burke
Russell E. Burke
STATE OF FLORIDA
COUNTY OF MONROE
)
) ss
)
On March 7, 2016 before me personally came Russell E. Burke, the individual described in, and who executed
the foregoing instrument, and he acknowledged to me that he executed the same.
Sworn to before me this
7 day of March, 2016.
/s/ E. Mercer
Notary Public
DURABLE POWER OF ATTORNEY
THIS is intended to constitute a DURABLE POWER OF ATTORNEY pursuant to Article 5, Title 15 of the New
York General Obligations Law:
I, George B. Langa, do hereby appoint each of Thomas B. Winmill, Mark C. Winmill, John F. Ramirez, and
Russell Kamerman, my attorneys-in-fact TO ACT SEPARATELY IN MY NAME, PLACE AND STEAD in any way
which I myself could do, if I were personally present, with respect to the following matters:
1.
2.
3.
execute for and on behalf of the undersigned, in the undersigned’s capacity as an individual, officer
and/or director of Global Self Storage, Inc. and any future company or other entity (“Companies”), Forms
3, 4, 5, Form 144, registration statements, proxy statements, forms and schedules, and all other documents
in accordance with all rules under the Securities Exchange Act of 1934, Securities Act of 1933 and all
other applicable law (the “Documents”);
do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable
to complete and execute any such Documents and file same with the United States Securities and
Exchange Commission and any stock exchange, clearing firm, registrar or transfer agent, as appropriate,
or similar authority, and
take any other action of any type whatsoever in connection with the foregoing which, in the opinion of
such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned,
it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned
pursuant to this Durable Power of Attorney shall be in such form and shall contain such terms and
conditions as such attorney-in-fact may approve in such attorney-in-fact’s discretion.
The undersigned hereby grants to each such attorney-in-fact full power and authority to do and perform any and
every act and thing whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers
herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full
power of substitution or revocation, hereby ratifying and confirming such attorney-in-fact, or such attorney-in-fact’s
substitute or substitute’s, shall lawfully do or cause to be done by virtue of this power of attorney and the rights and
powers herein granted. The undersigned hereby acknowledges that the foregoing attorneys-in-fact, in serving in such
capacity at the request of the undersigned, are not assuming, nor are the Companies assuming, any of the undersigned
responsibilities to comply with the rules of the Securities Exchange Act of 1934, the Securities Act of 1933 or any
other applicable law.
This Durable Power of Attorney shall not be affected by my subsequent disability or incompetence.
To induce any third party to act hereunder, I hereby agree that any third party receiving a duly execu ted copy
or facsimile of this instrument may act hereunder, and that revocation or termination hereof shall be ineffective
as to such third party unless and until actual notice or knowledge of such revocation or termination shall have
been received by such third party, and I for myself and my heirs, executors, legal representatives and assigns,
hereby agree to indemnify and hold harmless any such third party from and against any and all claims that may
arise against such third party by reason of such third party having relied on the provisions of this instrument.
This Durable Power of Attorney may be revoked by me at any time.
IN WITNESS WHEREOF, I have hereunto signed my name this 31 day of March, 2016.
/s/ George B. Langa
George B. Langa
STATE OF NEW YORK
COUNTY OF DUTCHES
)
) ss
)
On March 31, 2016 before me personally came George B. Langa, the individual described in, and who executed
the foregoing instrument, and he acknowledged to me that he executed the same.
Sworn to before me this
31st day of March, 2016.
/s/ Shawn Borrelli Pratt
Notary Public
DURABLE POWER OF ATTORNEY
THIS is intended to constitute a DURABLE POWER OF ATTORNEY pursuant to Article 5, Title 15 of the New
York General Obligations Law:
I, William C. Zachary, do hereby appoint each of Thomas B. Winmill, Mark C. Winmill, John F. Ramirez, and
Russell Kamerman, my attorneys-in-fact TO ACT SEPARATELY IN MY NAME, PLACE AND STEAD in any way
which I myself could do, if I were personally present, with respect to the following matters:
1.
2.
3.
execute for and on behalf of the undersigned, in the undersigned’s capacity as an individual, officer
and/or director of Global Self Storage, Inc. and any future company or other entity (“Companies”), Forms
3, 4, 5, Form 144, registration statements, proxy statements, forms and schedules, and all other documents
in accordance with all rules under the Securities Exchange Act of 1934, Securities Act of 1933 and all
other applicable law (the “Documents”);
do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable
to complete and execute any such Documents and file same with the United States Securities and
Exchange Commission and any stock exchange, clearing firm, registrar or transfer agent, as appropriate,
or similar authority, and
take any other action of any type whatsoever in connection with the foregoing which, in the opinion of
such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned,
it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned
pursuant to this Durable Power of Attorney shall be in such form and shall contain such terms and
conditions as such attorney-in-fact may approve in such attorney-in-fact’s discretion.
The undersigned hereby grants to each such attorney-in-fact full power and authority to do and perform any and
every act and thing whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers
herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full
power of substitution or revocation, hereby ratifying and confirming such attorney-in-fact, or such attorney-in-fact’s
substitute or substitute’s, shall lawfully do or cause to be done by virtue of this power of attorney and the rights and
powers herein granted. The undersigned hereby acknowledges that the foregoing attorneys-in-fact, in serving in such
capacity at the request of the undersigned, are not assuming, nor are the Companies assuming, any of the undersigned
responsibilities to comply with the rules of the Securities Exchange Act of 1934, the Securities Act of 1933 or any
other applicable law.
This Durable Power of Attorney shall not be affected by my subsequent disability or incompetence.
To induce any third party to act hereunder, I hereby agree that any third party receiving a duly executed copy
or facsimile of this instrument may act hereunder, and that revocation or termination hereof shall be ineffective
as to such third party unless and until actual notice or knowledge of such revocation or termination shall have
been received by such third party, and I for myself and my heirs, executors, legal representatives and assigns,
hereby agree to indemnify and hold harmless any such third party from and against any and all claims that may
arise against such third party by reason of such third party having relied on the provisions of this instrument.
This Durable Power of Attorney may be revoked by me at any time.
IN WITNESS WHEREOF, I have hereunto signed my name this 24th day of February, 2016.
/s/ William C. Zachary
William C. Zachary
STATE OF NEW YORK
COUNTY OF NEW YORK
)
) ss
)
On February 24th, 2016 before me personally came William C. Zachary, the individual described in, and who
executed the foregoing instrument, and he acknowledged to me that he executed the same.
Sworn to before me this
24th day of February, 2016.
/s/ Joseph Casper Shipley
Notary Public
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Mark C. Winmill, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Global Self Storage, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a)
b)
c)
d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;
Intentionally omitted.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing
the equivalent functions):
a)
b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: March 31, 2017
/s/ Mark C. Winmill
Mark C. Winmill
President and Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Thomas O’Malley, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Global Self Storage, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a)
b)
c)
d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;
Intentionally omitted.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing
the equivalent functions):
a)
b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: March 31, 2017
/s/ Thomas O’Malley
Thomas O’Malley
Chief Financial Officer, Treasurer and Vice President
(Principal Financial Officer)
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Mark C. Winmill, Chief Executive Officer of Global Self Storage, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that to the knowledge of the undersigned:
1.
2.
The Annual Report on Form 10-K for the year ended December 31, 2016 (the “Report”) which this statement accompanies
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
78o(d)); and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of Global Self Storage, Inc.
Date: March 31, 2017
/s/ Mark C. Winmill
Mark C. Winmill
President and Chief Executive Officer
This certification accompanies this Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be
deemed as filed by Global Self Storage, Inc. for purposes of Securities Exchange Act of 1934.
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Thomas O’Malley, Chief Financial Officer, Treasurer and Vice President of Global Self Storage, Inc., certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the knowledge of the undersigned:
1.
2.
The Annual Report on Form 10-K for the year ended December 31, 2016 (the “Report”) which this statement accompanies
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
78o(d)); and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of Global Self Storage, Inc.
Date: March 31, 2017
/s/ Thomas O’Malley
Thomas O’Malley
Chief Financial Officer, Treasurer and Vice President
(Principal Financial Officer)
This certification accompanies this Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be
deemed as filed by Global Self Storage, Inc. for purposes of Securities Exchange Act of 1934.