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Voluntary Announcement – Storagebase Acquisition (UK)
Stor-Age Property REIT Limited
Incorporated in the Republic of South Africa
Registration number 2015/168454/06
Share code: SSS ISIN ZAE000208963
Approved as a REIT by the JSE
(“Stor-Age” or the “Company”)
VOLUNTARY ANNOUNCEMENT – STORAGEBASE ACQUISITION (UK)
1 INTRODUCTION
The board of directors of Stor-Age is pleased to announce the acquisition of Storagebase for £59.0
million (the “Acquisition” or “Storagebase”).
Storagebase comprises four high-quality, well-located properties (the “Portfolio”) in the UK.
Moorfield Group (“Moorfield”) agreed to participate in the Acquisition on the same terms as the
existing joint venture arrangement between the parties. Accordingly, Moorfield will acquire 75.1%
and Stor-Age a 24.9% equity interest (the “Transaction”) in the Portfolio respectively.
The Portfolio will be branded and managed by Storage King under its third-party management
platform – Management 1st.
2 RATIONALE FOR THE ACQUISITION
The Acquisition of four dominant freehold UK properties is in line with the stated growth and
investment strategy of the Storage King business of pursuing value-added acquisitions in the UK.
The Acquisition represents an excellent opportunity to acquire a high-quality self storage property
portfolio in locations which complement the existing Storage King portfolio, providing additional scale
to the platform from both a financial and trading perspective.
With a gross lettable area (“GLA”) of 302 400 sqf (28 100m²), the Portfolio consists of predominantly
modern, bespoke, purpose-built properties located in Banbury, Wednesbury, Frome and Amesbury.
Banbury, Wednesbury and Frome, representing 200 400 sqf (18 600m²) GLA are well-established
mature self storage properties with attractive trading histories, evidenced in the combined portfolio
occupancy of more than 90% and an average achieved rental rate of £22.00 + per sqf per annum.
Well-located and with excellent visibility and prominence, the three mature properties trade into
dense residential areas and consist of above average GLA target sizes, which contribute to improved
operating margins.
The acquisition of the three mature properties represents a forward asset yield of c. 6.3% and an
equity yield of c. 13.2% (after an estimated tax charge) for Stor-Age.
Amesbury is a new, modern, purpose-built self storage property scheduled to open in April 2022.
With an estimated 102 000 sqf (9 500m²) GLA on full fit-out, the property presents the opportunity
for significant valuation upside as it leases-up to mature occupancy levels, supporting
outperformance over the medium term.
Including the Amesbury property, the Acquisition represents a forward equity yield of c. 11.6% (after
an estimated tax charge) for Stor-Age.
Stor-Age holds a right of first refusal in respect of each individual property, as well as for the Portfolio
as a whole, should Moorfield wish to exit any of the properties or the Portfolio at a point in time in
the future.
3 PORTFOLIO OVERVIEW
The Portfolio complements existing and to be developed Storage King properties, with Frome and
Amesbury providing Storage King with a greater presence in South West England, whilst Banbury
and Wednesbury complement existing properties in the Storage King portfolio in South East England
and the West Midlands respectively.
Details of the properties are set out in the table below:
Weighted
Gross lettable average annual
Property description Building type Occupancy
area (sqf) rental rate per
sqf
Banbury, Oxfordshire,
Conversion 59 300 £22.54 91.1%
South East England
Wednesbury, Purpose built 69 000 £19.01 86.7%
West Midlands, England
Frome, Somerset, Purpose built 72 100 £23.51 94.5%
South West England
Amesbury1, Wiltshire, Purpose built 102 000² n/a¹ n/a¹
South West England
302 400
1 – Assumed to commence trading in April 2022
2 – Estimated GLA on completion
4 ACQUISITION FUNDING
Moorfield Joint Venture (“JV”)
Stor-Age has a 24.9% equity interest in a JV with Moorfield, a leading UK real estate fund manager
with a more than 25-year track record, to develop and assemble a portfolio of high-quality self
storage properties in England. Stor-Age earns management fees for acquiring, developing and
managing properties in the JV.
The JV with Moorfield allows Stor-Age to grow and achieve further scale in the UK whilst providing
an attractive return on invested capital, thus providing an avenue to compete in a highly sought-after
and competitive first world market by providing access to high quality self storage assets at attractive
yields. It also allows Stor-Age to mitigate the financial impact of the lease-up of newly developed self
storage properties which can take a number of years to reach a stabilised and mature level of
occupancy.
Stor-Age’s equity contribution in the Transaction is £7.5 million.
Aviva Investors (“Aviva”) sustainability-linked debt funding
On completion of the Acquisition, the JV will enter a ‘green’ sustainability-linked loan facility with
Aviva. The loan facility will be aligned with Aviva’s Real Estate Debt Sustainable Transition Loan
Framework.
Aviva will provide the loan funding for the Acquisition on the following terms:
- Five-year term
- Interest only for the full period of the loan
- Loan to value of 55% – total loan value of £30.8 million
- Margin of 2.25% above the five-year UK gilt rate – estimated at 3.53%
5 CATEGORISATION
The Transaction is not a categorised transaction in terms of the JSE Listings Requirements and is
therefore not subject to approval by shareholders. This announcement is voluntary and for
information purposes only.
Stor-Age CEO Gavin Lucas commented:
“It’s now just over four years since Stor-Age made a strategic entry into the UK self storage market in
November 2017. In that period, we’ve seen Storage King deliver not only superb operating results, but
we’ve also seen it grow significantly from 13 properties to 30 today, with a further four properties secured
in the development pipeline.
Over and above Storagebase being our third acquisition in the UK in the current financial year, it also
demonstrates the strength, competitiveness, and sophistication of our UK platform. Following closely on
the heels of the recently announced McCarthy’s Storage World acquisition, it was secured after a
competitive bidding process, and then seamlessly packaged by introducing optimally matched in-country
equity capital from Moorfield and sustainability-linked debt funding from Aviva.
Storage King remains well-positioned to continue taking advantage of the fantastic growth opportunity in
the UK self storage market.”
Cape Town
22 March 2022
Buyer’s agent and valuation services
CBRE
Advisor and Sponsor
Investec Bank Limited
Date: 22-03-2022 07:30:00
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