Freedom Broker initiates coverage of REIT Global Self Storage, sees 20% upside

Shares of Global Self Storage, a real estate investment trust specializing in self-storage warehouses, are undervalued about 20% versus their fair value, according to Freedom Broker. Its analysts note that the company is expanding faster than peers, targeting markets with a favorable supply/demand balance, and emphasizing tenant retention.

Freedom Broker has initiated coverage of Global Self Storage, a U.S. micro cap REIT, with a "buy" recommendation, according to a note seen by Oninvest. The target price is $6.00 per share, which implies 18.7% upside from the last close. On Friday, September 26, the stock finished trading at $5.06 per share.

Shares are up about 0.4% in early trading today as of this writing.

Freedom Broker’s valuation is based on a discounted cash flow analysis. The analysts use the $6.15 per share valuation used by Etude Storage Partners in its May 2024 offer to acquire Global Self Storage.

Global Self Storage acquires, refurbishes, and manages self-storage facilities. It focuses on secondary U.S. cities with high barriers to new construction and less competition from large listed REITs, Freedom Broker notes.

The company prioritizes tenant quality, targeting credit card users who typically rent for longer periods, pay on time, and are more tolerant of rate increases.

In addition, Global Self Storage is significantly outpacing peers in organic revenue growth. In the second quarter, same-store revenue rose 2.7% year over year to $3.2 million.

Risks include intensifying competition, an aging portfolio that requires higher capital expenditures, and constraints related to scale and liquidity. As a micro cap, the company is more vulnerable to volatility, and the low liquidity could amplify drawdowns, Freedom Broker cautions.

Since the beginning of the year, Global Self Storage shares are down 5%. Wall Street coverage is limited to two analysts, both of whom rate the stock a "buy." Their average target price of $6.25 per share suggests 23% upside from current levels, MarketWatch data shows.

The AI translation of this story was reviewed by a human editor.