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Jernigan Capital: Self Storage Means More Stability

Jun. 08, 2020 10:46 AM ETJernigan Capital, Inc. (JCAP)CUBE, EXR, LSI, MFIN12 Comments
Chetan Woodun profile picture
Chetan Woodun


  • Jernigan Capital not only finances the development of self-storage properties but also acquires them.
  • The company has gone through a loss-making first quarter but management has consolidated the capital structure to face the forthcoming uncertainty.
  • It has liquidity to finance investments and add rental revenues.
  • According to my estimates, the company will again be profitable in the first half of 2022 and this, using a worst-case scenario.
  • At current prices, JCAP is a Buy.

The self-storage industry and Jernigan's positioning

Storage space is quickly becoming a necessity for many US homes. As home designs change, finding a home large enough to hold everything an individual or a family owns is getting tougher.

The answer to this problem is self storage and for many families, it is advantageous to rent a storage unit that is much cheaper than a mortgage. In addition, business owners are renting more and more storage to store their archives and excess items for later use.

In terms of investment, owning a self-storage business is an alternative to traditional real estate investments as it provides investors with a better return on investment (less maintenance costs) and more security in an uncertain economic environment.

Figure 1: Customer profiles for Self Storage space

Source: Learningstorage.com

Now, like all industries, self-storage has been impacted by confinement measures but the impact should also be temporary as the reasons for which customers lease self-storage space are strong.

First, most of the customers are residential ones and many of them who have to work from their homes will need more self storage as they make way for more space in their home. Also, there are students who have leased space as they have to vacate campuses and the same is the case for workers affected by layoffs.

Furthermore, in some states, self storage has been designated as an "essential business" and customers have been allowed to access their belongings.

As for Jernigan Capital (NYSE:JCAP), the company finances and makes equity investments in self-storage development projects (existing and recently constructed) and is increasingly owning self-storage facilities.

It has been mostly viewed by investors as a specialty finance company only, that is one which loans funds to property developers. However, looking under the hood, there is more. The company wants to make the transition

This article was written by

Chetan Woodun profile picture
My aim is to provide differentiated insights, whether it is for investing, trading, or informational reasons. For this purpose, I am not a classical equity researcher or fund manager, but, I come from the IT world as the founder of Keylogin Information and Technologies Co. Ltd. Thus, my research is often backed by analytics and I make frequent use of charts to support my position.I also invest, and thus, in this tumultuous market, I often look for strategies to preserve capital. As per my career history below, I have wide experience, initially as an implementer in virtualization and cloud, and I was subsequently a team leader and project lead, mostly working in telcos.I like to write around themes like automated supply chains, Generative AI, telcos Capex, the deflationary nature of software, semiconductors, etc and I am often contrarian. I have also covered biotechs.I have also been an entrepreneur in real estate ( a mediocre one), a business owner, and a farmer, and dedicate at least 5 hours per week to working on a non-profit basis. For this purpose, I help needy families by providing sponsored work and contributing peer reviews and opinions for enterprise tech.I have been investing for the last 25 years, initially in mutual or indexed funds before later opting for individual stocks. Got a lot of experience in the 2008/2009 downturn when I lost a lot due mostly to wrong advice. Since then I do my own research and have fallen in love with Seeking Alpha because of the unique perspectives it provides to someone investing hard-earned money as well as access to some of the best analysts.

Analyst’s Disclosure: I am/we are long JCAP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This is an investment thesis and is intended for informational purposes only. Investors are kindly requested to do additional research before investing or divesting.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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