Investment Company Act file number:
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811-08025
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We own and operate 7 self storage facilities located in the Northeast, Mid-Atlantic,
and Mid-West regions of the country under the brand Global Self Storage.
PORTFOLIO ANALYSIS
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June 30, 2015
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TOP TEN | June 30, 2015 | |||||||
HOLDINGS
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1 |
SSG Bolingbrook LLC |
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2 |
SSG Dolton LLC |
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3 |
SSG Rochester LLC |
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4 |
SSG Merrillville LLC |
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5 |
SSG Sadsbury LLC |
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6 |
SSG Summerville I LLC |
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7 |
SSG Summerville II LLC |
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8 |
Extra Space Storage, Inc. |
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9 |
CubeSmart |
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10 |
Sovran Self Storage, Inc. |
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Top ten holdings comprise approximately 87% of total assets.
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Holdings are subject to change. The above portfolio information should not be considered as a recommendation to purchase or sell a particular security and there is no assurance whether or not any securities will be retained. |
1 Semi-Annual Report 2015 |
SELF STORAGE GROUP, INC.
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TO OUR STOCKHOLDERS
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August 12, 2015 |
Financial Statements
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SAME - STORE PROPERTIES(1) |
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Year-to-date ended June 30
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2015
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2014
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Variance
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Percentage
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Revenues
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$2,175,299
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$1,854,388
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$320,911
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17.3%
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Costs of Operations
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927,426
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981,752
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(54,326)
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(5.5%)
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Funds from Operations
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1,247,873
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872,636
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375,237
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43.0%
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Sq. ft. occupancy
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90.1%
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88.9%
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1.2%
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1.4%
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Annualized Revenue per Leased Sq Ft
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$ 9.93
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$ 8.30
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$1.63
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19.6%
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(1) |
The table above is not a full and complete financial presentation of the Company’s results in accordance with U.S. generally accepted accounting principles (“GAAP”), but is rather a summary of certain of its self storage properties’ financial highlights. For example, certain expense and income items such as “Corporate overhead expense”, “Securities dividends and interest income” and “Realized gain (or losses) on securities” are not included, presented or discussed in this table. Funds From Operations (“FFO”) is defined by the National Association of Real Estate Investment Trusts, Inc. as net income computed in accordance with GAAP, excluding gains or losses on sales of operating properties and impairment write downs of depreciable real estate assets, plus depreciation and amortization and after adjustments to record unconsolidated partnerships and joint ventures on the same basis. The Company believes that to further understand the Company’s performance, FFO should be considered along with the reported net income and cash flows in accordance with GAAP, as presented in the Company’s consolidated financial statements. FFO does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to net income as an indication of the Company’s performance, as an alternative to net cash flow from operating activities as a measure of liquidity, or as an indicator of the Company’s ability to make cash distributions.
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SELF STORAGE GROUP, INC.
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Semi-Annual Report 2015 2
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President’s Letter
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GLOBAL SELF STORAGE FACILITIES |
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Year-to-date ended June 30
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Property |
Address |
Year |
Number |
Net Leasable |
June 30, 2015
|
June 30, 2014
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SSG BOLINGBROOK LLC |
296 North Weber Road Bolingbrook, IL 60440
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1997 | 499 | 66,850 | 96% | 93% | ||||||
SSG DOLTON LLC |
14900 Woodlawn Avenue Dolton, IL 60419
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2007 | 649 | 86,725 | 96% | 90% | ||||||
SSG MERRILLVILLE LLC |
6590 Broadway Merrillville, IN 46410
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2005 | 507 | 71,420 | 95% | 92% | ||||||
SSG ROCHESTER LLC |
2255 Buffalo Road Rochester, NY 14624
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2010 | 650 | 68,012 | 95% | 94% | ||||||
SSG SADSBURY LLC |
21 Aim Boulevard Sadsburyville, PA 19369 |
2006 | 699 | 79,004 | 78% | 92% | ||||||
SSG SUMMERVILLE I LLC |
1713 Old Trolley Road Summerville, SC 29485 |
1990 | 557 | 72,700 | 80% | 69% | ||||||
SSG SUMMERVILLE II LLC |
900 North Gum Street Summerville, SC 29483 |
1997 | 254 | 41,458 | 93% | 93% | ||||||
TOTAL
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3,815
|
486,169
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90.1%
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88.9%
|
||||||||
(1) |
Includes outside auto/RV/boat storage space of 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; and 5,300 square feet at SSG Summerville II LLC. During the first half of 2015, upon completion of its new construction project SSG Sadsbury LLC added 219 all-climate controlled storage units comprising 16,756 leasable square feet. Also during the first half of 2015, SSG Bolingbrook LLC eliminated 98 parking spaces (32,700 square feet) to accommodate its new buildings construction project which, when complete, will add some 320 climate-controlled and traditional storage units totaling 45,000 leasable square feet to the facility. Approximately 42% of our total available units are climate-controlled, 54% are traditional and 4% are parking.
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3 Semi-Annual Report 2015 |
SELF STORAGE GROUP, INC.
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TO OUR STOCKHOLDERS
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Financial Statements
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SELF STORAGE GROUP, INC.
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Semi-Annual Report 2015 4
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President’s Letter
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5 Semi-Annual Report 2015 |
SELF STORAGE GROUP, INC.
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TO OUR SHAREHOLDERS
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President’s Letter
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SELF STORAGE GROUP, INC.
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Semi-Annual Report 2015 6
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SCHEDULE OF PORTFOLIO INVESTMENTS
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June 30, 2015 (Unaudited)
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Financial Statements
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Member Equity Interest
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Value
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REAL ESTATE OWNED (82.87%) |
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Self Storage Properties (82.87%) |
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100% | SSG Bolingbrook LLC (a) (b) | $ | 6,000,002 | |||||||
100% | SSG Dolton LLC (a) (b) | 5,800,001 | ||||||||
100% | SSG Merrillville LLC (a) (b) | 5,700,000 | ||||||||
100% | SSG Rochester LLC (a) (b) | 5,800,001 | ||||||||
100% | SSG Sadsbury LLC (a) (b) | 5,500,001 | ||||||||
100% | SSG Summerville I LLC (a) (b) | 3,000,000 | ||||||||
100% | SSG Summerville II LLC (a) (b) | 1,700,000 | ||||||||
Total real estate owned (Cost $27,725,000) |
33,500,005 | |||||||||
Shares |
COMMON STOCKS (5.83%) |
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Real Estate Investment Trusts (5.83%) |
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Diversified (1.23%) |
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2,700 | Public Storage | 497,799 | ||||||||
Industrial (4.60%) |
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24,000 | CubeSmart | 555,840 | ||||||||
12,000 | Extra Space Storage, Inc. | 782,640 | ||||||||
6,000 | Sovran Self Storage, Inc. | 521,460 | ||||||||
1,859,940 | ||||||||||
Total common stocks (Cost $1,360,102) |
2,357,739 | |||||||||
PREFERRED STOCKS (2.92%) |
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Real Estate Investment Trusts (2.92%) |
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Industrial (0.98%) |
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15,000 | CubeSmart 7.75%, Series A | 395,250 | ||||||||
Retail (1.94%) |
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15,000 | Pennsylvania Real Estate Investment Trust, 8.25%, Series A | 398,700 | ||||||||
15,000 | Realty Income Corp., 6.625%, Series F | 387,150 | ||||||||
785,850 | ||||||||||
Total preferred stocks (Cost $1,165,208) |
1,181,100 | |||||||||
OTHER (0%) |
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2 | RMR Asia Pacific Fund Fractional shares (b) (Cost $ 0) | 0 | ||||||||
SHORT TERM INVESTMENT (8.82%) |
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3,565,353 | SSgA Money Market Fund, 7 day annualized yield 0.00% (Cost $3,565,353) | 3,565,353 | ||||||||
Total investments (Cost $33,815,663) (100.44%) | 40,604,197 | |||||||||
Liabilities in excess of cash and other assets (-0.44%) | (181,042) | |||||||||
Net assets (100.00%) | $ | 40,423,155 | ||||||||
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(a) Controlled affiliate.
(b) Illiquid and/or restricted security that has been fair valued.
LLC Limited Liability Company
See notes to financial statements. |
7 Semi-Annual Report 2015 |
SELF STORAGE GROUP, INC.
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STATEMENT OF ASSETS AND LIABILITIES
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(Unaudited)
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Financial Statements
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June 30, 2015
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Assets |
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Investments, at value |
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Wholly owned subsidiaries (cost $27,725,000) |
$ | 33,500,005 | ||||
Unaffiliated issuers (cost $6,090,663) |
7,104,192 | |||||
40,604,197 | ||||||
Cash |
29,754 | |||||
Dividends receivable |
13,200 | |||||
Other assets |
4,765 | |||||
Total assets |
40,651,916 | |||||
Liabilities |
||||||
Accounts payable and accrued expenses |
165,870 | |||||
Due to affiliates |
62,891 | |||||
Total liabilities |
228,761 |
|
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Net Assets |
$ | 40,423,155 | ||||
Net Asset Value Per Share |
||||||
(applicable to 7,416,766 shares outstanding: |
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20,000,000 shares of $.01 par value authorized ) |
$5.45 | |||||
Net Assets Consist of |
||||||
Paid in capital |
$ | 33,159,940 | ||||
Undistributed net realized gains |
428,165 | |||||
Net unrealized appreciation on investments |
6,835,050 | |||||
$ | 40,423,155 | |||||
See notes to financial statements. |
SELF STORAGE GROUP, INC.
|
Semi-Annual Report 2015 8
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STATEMENT OF OPERATIONS
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(Unaudited)
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Financial Statements
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Six Months Ended
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Investment Income |
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Dividends |
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Wholly owned subsidiaries |
$ | 1,140,000 | ||||||||
Unaffiliated issuers |
80,217 | |||||||||
Total investment income |
1,220,217 | |||||||||
Expenses |
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Compensation and benefits |
363,056 | |||||||||
Occupancy and other office expenses |
74,656 | |||||||||
Registration |
62,860 | |||||||||
Bookkeeping and pricing |
37,795 | |||||||||
Auditing |
20,915 | |||||||||
Directors |
20,415 | |||||||||
Legal |
18,800 | |||||||||
Stockholder communications |
11,698 | |||||||||
Custodian |
6,900 | |||||||||
Insurance |
5,430 | |||||||||
Transfer agent |
5,110 | |||||||||
Other |
2,877 | |||||||||
Total expenses |
630,512 | |||||||||
Net investment income |
589,705 | |||||||||
Realized and Unrealized Gain (Loss) |
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Net realized gain on investments in unaffiliated issuers |
900,368 | |||||||||
Net unrealized appreciation (depreciation) |
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Wholly owned subsidiaries |
2,220,006 | |||||||||
Unaffiliated issuers |
(423,652) | |||||||||
Net realized and unrealized gain |
2,696,722 | |||||||||
Net increase in net assets resulting from operations |
$ | 3,286,427 | ||||||||
See notes to financial statements. |
9 Semi-Annual Report 2015 |
SELF STORAGE GROUP, INC.
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STATEMENTS OF CHANGES IN NET ASSETS
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(Unaudited)
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Financial Statements
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Six Months Ended
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Year Ended December 31, 2014
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Operations |
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Net investment income |
$ | 589,705 | $ | 1,126,343 | ||||||||
Net realized gain |
900,368 | 1,459,315 | ||||||||||
Unrealized appreciation |
1,796,354 | 3,503,130 | ||||||||||
Net increase in net assets resulting from operations |
3,286,427 | 6,088,788 | ||||||||||
Distributions to Stockholders |
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Net investment income |
(491,977) | (450,425) | ||||||||||
Net realized gains |
(472,203) | (1,477,934) | ||||||||||
Total distributions |
(964,180) | (1,928,359) | ||||||||||
Total increase in net assets |
2,322,247 | 4,160,429 | ||||||||||
Net Assets |
||||||||||||
Beginning of period |
38,100,908 | 33,940,479 | ||||||||||
End of period |
$ | 40,423,155 | $ | 38,100,908 | ||||||||
End of period net assets include undistributed net investment loss |
$ | - | $ | (97,728) | ||||||||
See notes to financial statements. |
SELF STORAGE GROUP, INC.
|
Semi-Annual Report 2015 10
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STATEMENT OF CASH FLOWS
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(Unaudited)
|
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Financial Statements
|
Six Months Ended
|
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Cash Flows From Operating Activities |
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Net increase in net assets resulting from operations |
$ | 3,286,427 | ||||
Adjustments to reconcile increase in net assets resulting from operations to net cash provided by (used in) operating activities: |
||||||
Unrealized appreciation of investments |
(1,796,355) | |||||
Net realized gain on sales of investment securities |
(900,368) | |||||
Capital invested in wholly-owned subsidiaries |
(450,000) | |||||
Proceeds from sales of investment securities |
900,368 | |||||
Net purchases of short term investments |
(144,160) | |||||
Decrease in due from subsidiaries |
3,372 | |||||
Decrease in dividends receivable |
2 | |||||
Decrease in other assets |
5,430 | |||||
Increase in accrued expenses |
40,647 | |||||
Increase in due to affiliates |
18,817 | |||||
Net cash provided by operating activities |
964,180 | |||||
Cash Flows from Financing Activities |
||||||
Cash distributions paid |
(964,180) | |||||
Net cash used in financing activities |
(964,180) | |||||
Net change in cash |
- | |||||
Cash |
||||||
Beginning of period |
29,754 | |||||
End of period |
$ | 29,754 | ||||
See notes to financial statements. |
11 Semi-Annual Report 2015 |
SELF STORAGE GROUP, INC.
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NOTES TO FINANCIAL STATEMENTS
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June 30, 2015 (Unaudited)
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Financial Statements
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SELF STORAGE GROUP, INC.
|
Semi-Annual Report 2015 12
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NOTES TO FINANCIAL STATEMENTS
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(Unaudited)
|
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Financial Statements
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13 Semi-Annual Report 2015 |
SELF STORAGE GROUP, INC.
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NOTES TO FINANCIAL STATEMENTS
|
(Unaudited)
|
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Financial Statements
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Under the terms of the Company’s employment agreement with its President, Mark C. Winmill, the maximum monthly automobile allowance is $1,000 per month. 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 2015.
The Company leases office space from 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. For the six months ended June 30, 2015, the total rent paid by the Company to Tuxis was $6,000.
3. DISTRIBUTIONS TO STOCKHOLDERS AND DISTRIBUTABLE EARNINGS For the six months ended June 30, 2015, the Company paid distributions totaling $964,180. As of June 30, 2015, the distribution is estimated to be comprised of $491,977 and $472,203 of net investment income and net realized gains, respectively, based on information available at this time and is subject to change. The classification of these distributions for federal income tax purposes will be determined after the Company’s fiscal year ending December 31, 2015. Actual amounts may be recharacterized among net investment income, net realized gains, and return of capital for tax purposes after year end 2015, although the exact amount is not estimable as of June 30, 2015.
For the year ended December 31, 2014, the Company paid distributions comprised of the following:
Distributions paid from:
|
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Net investment income |
$ 450,425 | |
Net realized gains |
1,477,934 | |
Total distributions
|
$ 1,928,359
|
|
As of December 31, 2014, distributable earnings on a tax basis was comprised of the following:
|
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Unrealized appreciation |
$ 4,940,968 | |
|
The difference between book and tax unrealized appreciation is attributable to income of the Company’s wholly owned unconsolidated subsidiaries. Federal income tax regulations permit post-October net capital losses, if any, to be deferred and recognized on the tax return of the next succeeding taxable year.
4. VALUE MEASUREMENT GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
• Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities including securities actively traded on a securities exchange.
• Level 2 – observable inputs other than quoted prices included in level 1 that are observable for the asset or liability which may include quoted prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates, and similar data.
• Level 3 – unobservable inputs for the asset or liability including the Company’s own assumptions about the assumptions a market participant would use in valuing the asset or liability.
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets for the security, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair
SELF STORAGE GROUP, INC.
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Semi-Annual Report 2015 14
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NOTES TO FINANCIAL STATEMENTS
|
(Unaudited)
|
|||
Financial Statements
|
value is greatest for investments categorized in level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing investments are not necessarily an indication of the risk associated with investing in those securities.
The following is a description of the valuation techniques applied to the Company’s major categories of assets and liabilities measured at fair value on a recurring basis:
Real estate assets – Real estate assets, including self storage facilities held indirectly through one or more wholly owned and controlled subsidiaries, are valued using fair value pricing as determined in good faith by the VC under the direction of or pursuant to procedures approved by the Company’s Board of Directors. Real estate assets may be valued by reference to, among other things, quarterly appraisals by an independent third party and additional factors which may include assessment of comparable recent acquisitions, changes in cash flows from the operation of the subject property, and material events affecting the operation of the property.
Equity securities (common and preferred stock) – Most publicly traded equity securities are valued normally at the most recent official closing price, last sale price, evaluated quote, or closing bid price. To the extent these securities are actively traded and valuation adjustments are not applied, they may be categorized in level 1 of the fair value hierarchy. Equities on inactive markets or valued by reference to similar instruments may be categorized in level 2.
Restricted and/or illiquid securities – Restricted and/or illiquid securities for which quotations are not readily available or reliable may be valued with fair value pricing as determined in good faith by the VC under the direction of and pursuant to procedures approved by the Company’s Board of Directors. Restricted securities issued by publicly traded companies are generally valued at a discount to similar publicly traded securities. Restricted or illiquid securities issued by nonpublic entities may be valued by reference to comparable public entities or fundamental data relating to the issuer or both similar inputs. Depending on the relative significance of valuation inputs, these instruments may be categorized in either level 2 or level 3 of the fair value hierarchy.
The following is a summary of the inputs used as of June 30, 2015 in valuing the Company’s assets. Refer to the Schedule of Portfolio Investments for detailed information on specific investments.
ASSETS
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Level 1
|
Level 2
|
Level 3
|
Total
|
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Investments, at value |
||||||||||||||||||||
Real estate owned |
$ | - | $ | - | $ | 33,500,005 | $ | 33,500,005 | ||||||||||||
Common stocks |
2,357,739 | - | - | 2,357,739 | ||||||||||||||||
Preferred stocks |
1,181,100 | - | - | 1,181,100 | ||||||||||||||||
Other |
- |
|
- |
|
0 | 0 | ||||||||||||||
Short term investments |
3,565,353 | - | - | 3,565,353 | ||||||||||||||||
Total investments, at value
|
$
|
7,104,192
|
|
$
|
-
|
|
$
|
33,500,005
|
|
$
|
40,604,197
|
|
||||||||
There were no securities transferred from level 1 at December 31, 2014 to level 2 at June 30, 2015.
15 Semi-Annual Report 2015 |
SELF STORAGE GROUP, INC.
|
NOTES TO FINANCIAL STATEMENTS
|
(Unaudited)
|
|||
Financial Statements
|
The following is a reconciliation of level 3 assets including securities valued at zero:
Real Estate Owned
|
Other
|
Total
|
||||||||||||||||||||||
Balance at December 31, 2014 |
$ 30,830,000 | $ | 519,765 | $ | 31,349,765 | |||||||||||||||||||
Cost of purchases |
450,000 | - | 450,000 | |||||||||||||||||||||
Proceeds from sales |
- | (900,368) | (900,368) | |||||||||||||||||||||
Realized gain |
- | 900,368 | 900,368 | |||||||||||||||||||||
Transfers into (out of) level 3 |
- | - | - | |||||||||||||||||||||
Change in unrealized appreciation |
2,220,005 | (519,765) | 1,700,240 | |||||||||||||||||||||
Balance at June 30, 2015 |
$ 33,500,005
|
$ | 0 | $ | 33,500,005 | |||||||||||||||||||
Net change in unrealized appreciation attributable to assets still held as level 3 at June 30, 2015
|
$ 2,220,005
|
$
|
0
|
|
$
|
2,220,005
|
|
|||||||||||||||||
Unrealized gains (losses) are included in the related amounts on investments in the Statement of Operations.
The VC, under the direction of the Company’s Board of Directors, considers various valuation approaches for valuing assets categorized within level 3 of the fair value hierarchy. The factors used in determining the value of such assets may include, but are not limited to: marketability, professional appraisals of portfolio companies, company and industry results and outlooks, and general market conditions. The VC then recommends a value for each asset in light of all the information available. The determination of fair value involves subjective judgments. As a result, using fair value to price an investment may result in a price materially different from the price used by other investors or the price that may be realized upon the actual sale of the asset. Significant changes in any of those inputs in isolation may result in a significantly lower or higher value measurement. The pricing of all fair value assets is reported to the Company’s Board of Directors.
In valuing the self storage properties owned through the Company’s wholly owned subsidiaries as of June 30, 2015, the VC used a number of significant unobservable inputs to develop a range of possible values for the properties. It used a sales comparison approach which looks at recent sales of self storage properties considered similar to the subject property, an income capitalization approach which looks at discounted cash flow analysis based on certain assumptions regarding the property’s trend in income and expenses, and a cost approach which looks at recent comparable land sales in the subject area and the estimated replacement value of the existing buildings and site improvements.
The values obtained from weighting the three methods described above, with greater weight given to the sales comparison approach, were then discounted for the lack of marketability of the Company’s membership interest in each subsidiary, which represents the range of rates the VC believes market participants may apply. The resulting range of values, together with the underlying support, other information about each underlying property’s financial condition and results of operations and its industry outlook, were considered by the VC, which recommended a value for each subsidiary.
The following table presents additional information about valuation methodologies and inputs used for investments that are measured at fair value and categorized as level 3 as of June 30, 2015:
Fair Value
|
Valuation Technique
|
Unobservable Input
|
Range
|
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REAL ESTATE OWNED Self Storage Properties
|
$ | 33,500,005 | Income capitalization approach | Capitalization rates | 5% - 8% | |||||
OTHER |
$ | 0 | Liquidating value |
Discount rate for lack of marketability
|
100% | |||||
|
SELF STORAGE GROUP, INC.
|
Semi-Annual Report 2015 16
|
NOTES TO FINANCIAL STATEMENTS
|
(Unaudited)
|
|||
Financial Statements
|
5. 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 wholly owned subsidiary as recorded in the schedule of portfolio investments as of and for the six months ended June 30, 2015.
Beginning |
Membership Equity | Ending | Dividend | Value | ||||||||||||||||||||||||||||||
Equity Interest
|
Gross Additions |
Gross Reductions |
Equity Interest Percentage |
Income | June 30, 2015 | |||||||||||||||||||||||||||||
SSG Bolingbrook LLC |
100% | $ | - | $ | - | 100% | $ 200,000 | $ 6,000,002 | ||||||||||||||||||||||||||
SSG Dolton LLC |
100% | $ | - | $ | - | 100% | $ 250,000 | $ 5,800,001 | ||||||||||||||||||||||||||
SSG Merrillville LLC |
100% | $ | - | $ | - | 100% | $ 190,000 | $ 5,700,000 | ||||||||||||||||||||||||||
SSG Rochester LLC |
100% | $ | - | $ | - | 100% | $ 255,000 | $ 5,800,001 | ||||||||||||||||||||||||||
SSG Sadsbury LLC |
100% | $ | 450,000 | $ | - | 100% | $ 40,000 | $ 5,500,001 | ||||||||||||||||||||||||||
SSG Summerville I LLC |
100% | $ | - | $ | - | 100% | $ 125,000 | $ 3,000,000 | ||||||||||||||||||||||||||
SSG Summerville II LLC
|
100%
|
$
|
-
|
|
$
|
-
|
|
100%
|
$ 80,000
|
$ 1,700,000
|
||||||||||||||||||||||||
The Company’s wholly owned subsidiaries are each a controlled affiliate as defined under the Act. A controlled affiliate is an issuer in which the Company’s holdings represent 25% or more of the outstanding voting securities of such issuer.
6. SUMMARIZED FINANCIAL INFORMATION OF WHOLLY OWNED SUBSIDIARIES Each of the Company’s wholly owned subsidiaries owns and operates a self storage facility business. The following sets forth unaudited summarized information as to assets, liabilities, and results of operations for each wholly owned subsidiary as of and for the six months ended June 30, 2015:
Dollars in thousands
|
SSG
|
SSG
|
SSG
|
SSG
|
SSG
|
SSG
|
SSG
|
||||||||||||||||||||||||||||||||||||||||||
OPERATING DATA |
|||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended June 30, 2015
|
|||||||||||||||||||||||||||||||||||||||||||||||||
Rental revenues | $ | 334 | $ | 378 | $ | 311 | $ | 490 | $ | 306 | $ | 228 | $ | 127 | |||||||||||||||||||||||||||||||||||
Costs of operations | 135 | 126 | 118 | 229 | 170 | 103 | 52 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Income from operations | $ | 199 | $ | 252 | $ | 193 | $ | 261 | $ | 136 | $ | 125 | $ | 75 | |||||||||||||||||||||||||||||||||||
Depreciation and amortization | $ | 64 | $ | 58 | $ | 56 | $ | 43 | $ | 48 | $ | 27 | $ | 15 | |||||||||||||||||||||||||||||||||||
Net income | $ | 135 | $ | 194 | $ | 137 | $ | 218 | $ | 88 | $ | 98 | $ | 60 | |||||||||||||||||||||||||||||||||||
BALANCE SHEET DATA |
|||||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2015
|
|||||||||||||||||||||||||||||||||||||||||||||||||
Real estate assets, net | $ | 5,489 | $ | 4,940 | $ | 4,656 | $ | 3,513 | $ | 4,575 | $ | 2,219 | $ | 1,243 | |||||||||||||||||||||||||||||||||||
Total assets | $ | 5,664 | $ | 5,076 | $ | 4,767 | $ | 3,654 | $ | 4,709 | $ | 2,267 | $ | 1,271 | |||||||||||||||||||||||||||||||||||
Total liabilities | $ | 131 | $ | 104 | $ | 79 | $ | 28 | $ | 19 | $ | 43 | $ | 24 | |||||||||||||||||||||||||||||||||||
17 Semi-Annual Report 2015 |
SELF STORAGE GROUP, INC.
|
NOTES TO FINANCIAL STATEMENTS
|
(Unaudited)
|
|||
Financial Statements
|
7. ILLIQUID AND RESTRICTED INVESTMENTS The Company holds investments that have a limited trading market and/or certain restrictions on trading and, therefore, may be illiquid and/or restricted. These investment holdings have been valued at fair value. Due to the inherent uncertainty of valuation, fair value pricing values may differ from the values that would have been used had a readily available market for the securities existed. These differences in valuation could be material. Illiquid and/or restricted investment holdings owned at June 30, 2015, were as follows:
Acquisition Date
|
Cost
|
Value
|
||||||||||||||||
SSG Bolingbrook LLC |
6/27/13 | $ |
5,700,000 |
|
$ | 6,000,002 | ||||||||||||
SSG Dolton LLC |
6/27/13 | 5,100,000 | 5,800,001 | |||||||||||||||
SSG Merrillville LLC |
6/27/13 | 4,825,000 | 5,700,000 | |||||||||||||||
SSG Rochester LLC |
12/5/12 | 3,750,000 | 5,800,001 | |||||||||||||||
SSG Sadsbury LLC |
12/24/12 | 4,750,000 | 5,500,001 | |||||||||||||||
SSG Summerville I LLC |
7/12/13 | 2,300,000 | 3,000,000 | |||||||||||||||
SSG Summerville II LLC |
8/20/13 | 1,300,000 | 1,700,000 | |||||||||||||||
RMR Asia Pacific Fund Fractional shares
|
|
2010
|
|
|
0
|
|
|
0
|
|
|||||||||
Total
|
$
|
27,725,000
|
|
$
|
33,500,005
|
|
||||||||||||
Percent of net assets
|
|
69
|
%
|
|
83
|
%
|
||||||||||||
8. INVESTMENT TRANSACTIONS Purchases and proceeds of investments, excluding short term investments, were $450,000 and $900,368, respectively, for the six months ended June 30, 2015. As of June 30, 2015, for federal income tax purposes subject to change, the aggregate cost of investments was $33,873,124 and net unrealized appreciation was $6,731,073, comprised of gross unrealized appreciation of $6,792,197 and gross unrealized depreciation of $61,124. The aggregate cost of investments for tax purposes will depend upon the Company’s investment experience during the entirety of its fiscal year and may be subject to changes based on tax regulations.
9. BORROWING AND SECURITIES LENDING The Company has entered into a Committed Facility Agreement (the “CFA”) with BNP Paribas Prime Brokerage, Inc. (“BNP”) that allows the Company to adjust its credit facility amount up to $20,000,000, and a Lending Agreement, as defined below. Borrowings under the CFA are secured by assets of the Company that are held with the Company’s custodian in a separate account (the “pledged collateral”). Interest is charged at the 1 month LIBOR (London Inter-bank Offered Rate) plus 0.95% on the amount borrowed and 0.50% on the undrawn balance. Because the Company adjusts the facility amount each day to equal borrowing drawn that day, the 0.50% annualized rate charge on undrawn facility amounts provided for by the CFA has not been incurred. As of June 30, 2015, there was no outstanding loan balance or assets pledged as collateral and there was no borrowing activity during the six months ended June 30, 2015.
The Lending Agreement provides that BNP may borrow a portion of the pledged collateral (the “Lent Securities”) in an amount not to exceed the outstanding borrowings owed by the Company to BNP under the CFA. BNP may re-register the Lent Securities in its own name or in another name other than the Company and may pledge, re-pledge, sell, lend, or otherwise transfer or use the Lent Securities with all attendant rights of ownership. The Company may designate any security within the pledge collateral as ineligible to be a Lent Security, provided there are eligible securities within the pledged collateral in an amount equal to the outstanding borrowing owed by the Company. BNP must remit payment to the Company equal to the amount of all dividends, interest, or other distributions earned or made by the Lent Securities.
SELF STORAGE GROUP, INC.
|
Semi-Annual Report 2015 18
|
NOTES TO FINANCIAL STATEMENTS
|
(Unaudited)
|
|||
Financial Statements
|
19 Semi-Annual Report 2015 |
SELF STORAGE GROUP, INC.
|
NOTES TO FINANCIAL STATEMENTS
|
(Unaudited) concluded
|
|||
Financial Statements
|
SELF STORAGE GROUP, INC.
|
Semi-Annual Report 2015 20
|
FINANCIAL HIGHLIGHTS
|
(Unaudited)
|
|||
Financial Statements
|
Six Months June 30, 2015
|
Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||
Per Share Operating Performance |
2014
|
2013
|
2012
|
2011
|
2010
|
|||||||||||||||||||||||||||||||||||||||
(for a share outstanding throughout each period) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period |
$5.14 | $4.58 | $4.74 | $4.60 | $5.00 | $4.43 | ||||||||||||||||||||||||||||||||||||||
Income from investment operations: |
||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) (1) |
.08 | .15 | (.09 | ) | .01 | .19 | .20 | |||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments |
.36 | .67 | .28 | .60 | (.33 | ) | .59 | |||||||||||||||||||||||||||||||||||||
Total income from investment operations |
.44 | .82 | .19 | .61 | (.14 | ) | .79 | |||||||||||||||||||||||||||||||||||||
Less distributions: |
||||||||||||||||||||||||||||||||||||||||||||
Net investment income |
(.07 | ) | (.06 | ) | (.06 | ) | (.02 | ) | (.26 | ) | (.22 | ) | ||||||||||||||||||||||||||||||||
Net realized gains |
(.06 | ) | (.20 | ) | (.29 | ) | (.45 | ) | - | - | ||||||||||||||||||||||||||||||||||
Total distributions |
(.13 | ) | (.26 | ) | (.35 | ) | (.47 | ) | (.26 | ) | (.22 | ) | ||||||||||||||||||||||||||||||||
Net asset value, end of period |
$5.45 | $5.14 | $4.58 | $4.74 | $4.60 | $5.00 | ||||||||||||||||||||||||||||||||||||||
Market value, end of period |
$3.54 | $3.63 | $3.59 | $3.69 | $3.78 | $4.17 | ||||||||||||||||||||||||||||||||||||||
Total Return (2) |
||||||||||||||||||||||||||||||||||||||||||||
Based on net asset value |
9.99 | % | 20.67 | % | 5.70 | % | 16.22 | % | (1.86 | )% | 19.60 | % | ||||||||||||||||||||||||||||||||
Based on market price |
1.17 | % | 8.72 | % | 6.43 | % | 10.10 | % | (3.30 | )% | 21.07 | % | ||||||||||||||||||||||||||||||||
Ratios/Supplemental Data (3) |
||||||||||||||||||||||||||||||||||||||||||||
Net assets at end of period (000s omitted) |
$40,423 | $38,101 | $33,940 | $35,155 | $34,102 | $37,071 | ||||||||||||||||||||||||||||||||||||||
Ratio of total expenses to average net assets |
3.29 | %* | 3.72 | % | 3.14 | % | 2.60 | % | 2.31 | % | 2.00 | % | ||||||||||||||||||||||||||||||||
Ratio of net expenses excluding loan interest and fees to average net assets |
3.29 | %* | 3.71 | % | 3.14 | % | 2.60 | % | 2.30 | % | 1.96 | % | ||||||||||||||||||||||||||||||||
Ratio of net investment income (loss) to average net assets |
3.08 | %* | 3.19 | % | (1.88 | )% | 0.25 | % | 4.31 | % | 4.33 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate
|
|
1
|
%
|
1 | % | 57 | % | 115 | % | 22 | % | 55 | % | |||||||||||||||||||||||||||||||
(1) |
The per share amounts were calculated using the average number of common shares outstanding during the period. |
(2) |
Total return on a market value basis is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each period reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Company’s dividend reinvestment plan if in effect or, if there is no plan in effect, at the lower of the per share net asset value or the closing market price of the Company’s shares on the dividend/distribution date. Generally, total return on a net asset value basis will be higher than total return on a market value basis in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total return on a net asset value basis will be lower than total return on a market value basis in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods. The calculation does not reflect brokerage commissions, if any. |
(3) |
Expenses and income ratios do not include expenses incurred by an Acquired Fund in which the Company invests. |
* |
Annualized. |
21 Semi-Annual Report 2015 |
SELF STORAGE GROUP, INC.
|
POLICIES AND RISKS
|
(Unaudited)
|
|||
Additional Information
|
SELF STORAGE GROUP, INC.
|
Semi-Annual Report 2015 22
|
POLICIES AND RISKS
|
(Unaudited)
|
|||
Additional Information
|
23 Semi-Annual Report 2015 |
SELF STORAGE GROUP, INC.
|
DIVIDENDS
|
(Unaudited)
|
|||
Additional Information
|
HISTORICAL DISTRIBUTION SUMMARY
|
||||||||||||||
PERIOD
|
Investment Income
|
Return of Capital
|
Capital Gains
|
Total
|
||||||||||
June 30, 2015* |
$ 0.070 | $ 0.000 | $ 0.060 | $ 0.130 | ||||||||||
2014 |
$ 0.060 | $ 0.000 | $ 0.200 | $ 0.260 | ||||||||||
2013 |
$ 0.060 | $ 0.000 | $ 0.290 | $ 0.350 | ||||||||||
2012 |
$ 0.020 | $ 0.000 | $ 0.450 | $ 0.470 | ||||||||||
2011 |
$ 0.260 | $ 0.000 | $ 0.000 | $ 0.260 | ||||||||||
2010 |
$ 0.220 | $ 0.000 | $ 0.000 | $ 0.220 | ||||||||||
2009 |
$ 0.235 | $ 0.000 | $ 0.000 | $ 0.235 | ||||||||||
2008 |
$ 0.240 | $ 0.000 | $ 0.000 | $ 0.240 | ||||||||||
2007 |
$ 0.170 | $ 0.050 | $ 0.000 | $ 0.220 | ||||||||||
2006 |
$ 0.130 | $ 0.150 | $ 0.000 | $ 0.280 | ||||||||||
2005 |
$ 0.200 | $ 0.080 | $ 0.000 | $ 0.280 | ||||||||||
2004 |
$ 0.245 | $ 0.090 | $ 0.000 | $ 0.335 | ||||||||||
2003 |
$ 0.220 | $ 0.140 | $ 0.000 | $ 0.360 | ||||||||||
2002 |
$ 0.280 | $ 0.220 | $ 0.000 | $ 0.500 | ||||||||||
2001 |
$ 0.360 | $ 0.200 | $ 0.000 | $ 0.560 | ||||||||||
2000 |
$ 0.420 | $ 0.160 | $ 0.000 | $ 0.580 | ||||||||||
6 months ended 12/31/99 |
$ 0.230 | $ 0.070 | $ 0.000 | $ 0.300 | ||||||||||
12 months ended 6/30/99 |
$ 0.550 | $ 0.130 | $ 0.000 | $ 0.680 | ||||||||||
From June 29, 1998 to November 30, 1998 |
$ 0.520 | $ 0.320 | $ 0.000 | $ 0.840 | ||||||||||
|
*The classification of these distributions for federal income tax purposes will be determined after the Company’s fiscal year ending December 31, 2015. Actual amounts may be recharacterized among net investment income, net realized gains, and return of capital for tax purposes after year end 2015, although the exact amount is not estimable as of June 30, 2015.
SELF STORAGE GROUP, INC.
|
Semi-Annual Report 2015 24
|
GENERAL INFORMATION
|
(Unaudited)
|
|||
Additional Information
|
Cautionary Note Regarding Forward Looking Statements - This report contains “forward looking statements” as defined under the U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” and similar expressions identify forward looking statements, which generally are not historical in nature. Forward looking statements are subject to certain risks and uncertainties that could cause actual results to materially differ from the Company’s historical experience and its current expectations or projections indicated in any forward looking statements. These risks include, but are not limited to, equity securities risk, corporate bonds risk, credit risk, interest rate risk, leverage and borrowing risk, additional risks of certain securities or other assets (including real estate) in which the Company invests, market discount from net asset value, distribution policy risk, management risk, and other risks discussed in the Company’s filings with the SEC. You should not place undue reliance on forward looking statements, which speak only as of the date they are made. The Company undertakes no obligation to update or revise any forward looking statements made herein. There is no assurance that the Company’s objectives will be attained.
Company Information - This report, including the financial statements herein, is transmitted to the stockholders of the Company for their information. This is not a prospectus, circular, or representation intended for use in the purchase of shares of the Company or any securities mentioned in this report. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state, or an exemption therefrom.
Section 23 Notice - Pursuant to Section 23 of the Investment Company Act of 1940, as amended, notice is hereby given that the Company may in the future purchase its own shares in the open market. These purchases may be made from time to time, at such times, and in such amounts, as may be deemed advantageous to the Company, although nothing herein shall be considered a commitment to purchase such shares.
25 Semi-Annual Report 2015 |
SELF STORAGE GROUP, INC.
|
(a)
|
The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the "1940 Act")) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended.
|
(b)
|
There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant's second fiscal quarter of the period covered by the report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
|
(a)(1)
|
Not applicable.
|
(a)(2)
|
Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2) attached hereto as Exhibit EX-99. |
(a)(3)
|
Not applicable. |
(b)
|
Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto as Exhibit EX-99 906. |
Self Storage Group, Inc.
|
|
August 27, 2015
|
By: /s/ Mark C. Winmill
|
Mark C. Winmill, President
|
|
Self Storage Group, Inc.
|
|
August 27, 2015
|
By: /s/ Thomas O’Malley
|
Thomas O’Malley, Chief Financial Officer
|
|
Self Storage Group, Inc.
|
|
August 27, 2015
|
By: /s/ Mark C. Winmill
|
Mark C. Winmill, President
|
|
Self Storage Group, Inc.
|
|
August 27, 2015
|
By: /s/ Thomas O’Malley
|
Thomas O’Malley, Chief Financial Officer
|
(a) 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;
|
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles
|
(c) 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 a date within 90 days prior to the filing date of this report based on such evaluation; and
|
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
(a) 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
|
(b) 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.
|
August 27, 2015
|
By: /s/ Mark C. Winmill
Mark C. Winmill
President
|
(a) 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;
|
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles
|
(c) 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 a date within 90 days prior to the filing date of this report based on such evaluation; and
|
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
(a) 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
|
(b) 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.
|
August 27, 2015
|
By: /s/ Thomas O'Malley
Thomas O'Malley
Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the issuer.
|
August 27, 2015
|
By: /s/ Mark C. Winmill
Mark C. Winmill
Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the issuer.
|
August 27, 2015
|
By: /s/ Thomas O'Malley
Thomas O'Malley
Chief Financial Officer
|
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