The board of directors for Self Storage Group Inc. (SSG), an investment-management company with interests in self-storage, approved a shareholder-rights plan last week in conjunction with the company’s intention to qualify as a real estate investment trust (REIT) for federal tax purposes. SSG wants to change from an investment company to an operating company that “owns, operates, manages, acquires, develops and redevelops professionally managed self-storage facilities,” officials said in a press release.
The company recently changed its name from Global Income Fund. SSG manages the Global Self Storage brand of facilities, which operates six locations in Illinois, Indiana, Pennsylvania and South Carolina. As part of its new business plan, SSG also has invested in REITs, terminated its investment-management agreement and converted to internal management, officials said.
One of the key requirements to qualify as a REIT is that no more than 50 percent of the value of the company’s outstanding shares may be owned directly, indirectly or constructively by five or fewer individuals or certain entities.
To implement the shareholder-rights plan, SSG declared a special dividend distribution of one non-transferrable right for each outstanding share of the company’s common stock of $.01 per share to stockholders of record at the close of business on Dec. 6. The rights will be distributed as a non-taxable dividend and expire at the close of business on April 4, 2014, unless redeemed earlier or exchanged by the company.
Subject to certain exceptions, the rights will become exercisable 10 days following a public announcement that a person or group has acquired “beneficial ownership” of 19 percent or more of the outstanding shares of the company’s common stock. If this occurs, however, anyone who “beneficially owns” more than 17 percent of the outstanding common shares will not be permitted to exercise any rights associated with the shares in excess of 17 percent. SSG’s board could terminate the plan at any time or redeem the rights, for $.01 per right, at any time before anyone owns 19 percent or more of the company’s common stock, officials said.
SSG is a non-diversified, closed-end, investment-management firm whose common stock is traded over the counter under the ticker symbol “SELF.” The primary investment objective of the company has been to provide a high level of income, with capital appreciation as a secondary objective.