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SA News • Sep. 4, 2013
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Self Storage Group: REITs Can Be Terrible Investments But This New REIT Could Soar
- NAV of $4.82 implies the stock ($3.55) could see appreciation of 35.8% if it traded at a 1 P/B.
- SELF transitioned from an Investment Mgmt company to a REIT; they will distribute $1/Share of other investments; Expected returns (@ 1 P/B) become 1.27/2.55 = 49.8% (ex. Dividends).
- All 7 storage facilities were built in 2012/13 and are state-of-the-art climate-controlled facilities. Cap Rates imply Carrying Value could be as high as $33m ($28.5m currently).
- SELF yields 7.3% ($0.065/Q dividend), which can be considered safe given projected FY14 FFO. After the special dividend and with occupancy of 90%, SELF would yield ~10-12%.
- SELF is a low-risk investment with a portfolio consisting of 7 new state-of-the-art climate-controlled facilities and $0 debt. As a result, breakeven occupancy rates are ~20% (well below average).
- SELF was formerly a closed-end income fund, and is now reorganizing as a REIT investing in personal storage units.
- Legacy investors are selling because confused by the change, but new investors are not yet aware of the opportunity, leading to the current undervaluation.
- SELF has an 8% annual yield trades at a 30% discount to NAV (at $3.25 stock price.) Comparable large-cap storage REITs yield around 3%.
- If yield were to drop to just (6%), twice that of typical large-cap self storage REITs, investors would see a 40%+ total return over a year.
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Sep. 4, 2013, 12:08 AM| Comment!
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Self Storage Group, Inc. (Ticker: SELF) is a closed end fund with the primary and fundamental objective of providing its shareholders a high level of income. The Company is non-diversified. More information about the Company may be obtained at www.selfstoragegroupinc.com.
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