Global Self Storage, Inc. (SELF) stock intrinsic value fair value estimate & owner earnings analysis

Global Self Storage owns and operates twelve self-storage properties in Illinois (Bolingbrook, Dolton), Indiana (Fishers, Merrillville), Ohio (Lima), New York (Millbrook, Rochester), Connecticut (Clinton), Pennsylvania (Sadsburyville) and South Carolina (two in Summerville), and manages one additional store for a third party in Edmond, Oklahoma. It has not bought or built a property since 2020, so today's results describe a fixed portfolio: roughly a third climate-controlled units, the rest drive-up units and outdoor boat/RV parking. Occupancy is high and steady (94.7% at June 30, 2026), and the company raises rents on existing tenants through a revenue-management program; average tenant stays have lengthened from 3.4 to 3.6 years. How we measure earnings. We start from operating cash flow, strip out swings in receivables and payables, subtract stock compensation (a real cost to shareholders) and subtract routine building and equipment spending. Money spent buying or building stores before 2020 is treated as growth investment, not upkeep. Because shareholders only own what is left after the lender is paid, we value the business before its interest bill and then subtract the debt. We also take out the interest and dividends earned on the company's cash and investment portfolio (about $289,000 in 2025), because we add that cash and those investments to the value separately instead. On that basis the properties produced about $0.46 per share in 2022, $0.42 in 2023, $0.40 in 2024 and $0.38 in 2025. We set aside 2021-2022 as boosted by the pandemic surge in storage demand, which has since reversed across the industry, and take the 2023-2025 median, about $0.40 per share, as the normal level. What changed recently. Earnings have now slipped three years running, and the first half of 2026 continued the slide: revenue rose 1.1%, but same-store net operating income fell 3.8% because property operating costs jumped 9.1% (employment costs and real-estate property taxes), and administrative costs rose 7.9% (partly one-time professional fees for amending the equity incentive plan). Cash earnings per share on our measure were about 14% lower than a year earlier. The 2025 decline was about 5%. So our central case assumes 2026 comes in about 8.5% below 2025, not a rebound. Rents on existing tenants have risen every year, but for the last three years costs have risen faster, so we give no credit for earnings growth. Base case (the median outcome): 2026 earnings of about $0.345 per share, easing to about $0.335 by 2028 as rent increases roughly catch up with cost inflation, then flat in dollar terms for good. The stores are long-lived real estate whose upkeep is already charged every year, so they keep earning after year ten, but we assume no growth beyond today's level. The business is worth about $65.9 million ($5.84 per share). After subtracting net debt of about $5.0 million, the shares are worth about $5.40. Bear case (roughly the 10th-percentile outcome): the 2023-2026 squeeze continues for four more years, with property taxes and wages rising about 4% a year faster than rents, and upkeep spending stays at the 2025 level of about $330,000 a year instead of the roughly $200,000 average. Per-share earnings fall to about $0.27 by 2031 and stay there. The business is worth about $55.2 million, it owes a net $5.0 million, leaving about $50.2 million, or $4.45 per share. Even in this case, the properties earn about five times their annual interest bill. Bull case (roughly the 90th-percentile outcome): cost growth cools, the one-time fees drop away, and rent increases return earnings to the 2024-2025 level of about $0.39 per share by 2029, followed by about 1% a year of growth through 2036 from continued rent increases on existing tenants. The business is worth about $79.9 million, less $5.0 million of net debt, leaving about $74.9 million, or $6.63 per share. We left out any credit for new acquisitions, even though the company has an undrawn $14.5 million credit line with Huntington National Bank that it says it may use for them, because no purchase is under way. Debt. The only borrowing is a $15.7 million mortgage-style term loan at a fixed 4.192% that pays down about $620,000 a year and leaves a balance of about $7.9 million due on July 1, 2036. Because it is locked in well below 6% for ten years, the loan is worth about $14.0 million in today's money rather than its $15.7 million face value. Against it the company holds $7.5 million of cash (we keep $1.0 million back as working cash) and $2.6 million of marketable securities, so net debt is about $5.0 million, roughly $0.44 per share. The Huntington line matures July 6, 2027 (extendable to 2028) and is undrawn, and at current earnings refinancing the 2036 balance should not be a problem in any of our cases. Why our numbers moved. Our previous estimates were $5.11, $6.52 and $8.54. They had valued the stores' earnings after interest and never set the debt or the cash against each other. They also assumed per-share earnings would grow in the first years and keep pace with inflation forever. Handling the debt and cash properly is worth a little more per share than before. The larger change is that the first half of 2026 confirmed the cost squeeze, so we no longer assume growth. That lowers all three cases. What would make this estimate wrong: if the rent program regains the pricing seen in 2021-2022 while taxes and wages settle, value would move toward the bull case. If new competing supply appears near one of the smaller markets, or property-tax reassessments keep rising, the bear case becomes more likely. A few directors and officers of the company also run affiliated companies (Winmill & Co., Bexil, Tuxis), and the company reimburses an affiliate for payroll at cost, about $3.15 million in 2025. That is a governance point to watch, not a problem we found in the numbers. The margin-of-safety price is around $4.00, a margin of about 26% below our central value and below our bear case. That margin reflects a small, twelve-property business whose earnings have been drifting down.