Stor-Age Property REIT Limited (Stor-Age) is a self-storage property portfolio manager that listed as a REIT on the JSE in November 2015. They were the first - and remain the only - self-storage REIT listed on the JSE.
The largest player in the self-storage sector, they have become a recognisable company in a very short period of time, owing to their striking red and white branding and very modern self-storage facilities which are strategically located in the major cities across South Africa. Stor-Age has also ventured into UK territories, but more on that later.
Source: Stor-Age Annual results presentation brochure (12 June 2018)
On Tuesday, 12 June 2018, Stor-Age released their provisional summarised consolidated results for the year ended 31 March 2018. We’ve scanned through the results and presented the highlights reel for your convenience.
For the full SENS item, please follow the following link to Sharenet, which provides the full SENS item: provisional summarised consolidated results of the company and its subsidiary companies ("the group") for the year ended 31 March 2018.
The board of Stor-Age noted that it was "pleased to present continued strong trading results for the financial year... in which the group continued to deliver real gains in rental rates and occupancy to drive sustainable revenue and earnings growth."
Given the difficult trading environment and uncertainty around political and economic events over this reporting period, Stor-Age can indeed feel pleased with this set of results. Starting with a very welcomed 11.1% increase in dividends over the prior year, the results release certainly gets off to a good start.
The group were also able to make significant headway in respect to acquisitions over the year in review. The group’s major acquisitions consisted of Storage RSA, Unit Self Storage and StorTown in South Africa as well as an international foray in the UK through the addition of Storage King. All the properties added significant scale and value to the portfolio.
In the short time since the REIT’s listing (November 2015), management have increased Gross Lettable Area (GLA) by approximately 77% to a total of more than 321 000mē and the value of the underlying properties has tripled to R3.9 billion. The portfolio as at the end of April 2018 now includes 63 properties as illustrated below:
Source: Stor-Age website
Occupancy levels averaged 84% across the South African and UK portfolio, improving year-on-year. South African rentals averaged R91.6/mē, which translated to an improved 9.2% increase on like-for-like properties (i.e. excluding new acquisitions).
What does the future hold?
The current gearing at Gearing (LTV ratio) for the South African component of the portfolio sits at a very conservative 9.1% and again respectable 28.8% in the UK for a combined value of 16.1%. By international standards, the REIT are conservatively positioned and can continue to acquire properties relatively aggressively, something the group continues to look at doing, including offshore.
According to the board the "strategic entry into the UK self-storage market, off an established and scalable platform, will enable Stor-Age to selectively grow its offshore portfolio in regions where self-storage sector fundamentals remain attractive."
The board also recorded that they anticipate dividend growth of approximately 9 - 10% for the year ending 31 March 2019.
Investment Specialist at Discovery Invest
Mark graduated with a Business Science Degree from the University of Cape Town in 2007. He then joined Sharenet, during which time he also completed his B.Com Honours through UNISA. Mark has helped to build, launch and manage derivative and share trading brokerage businesses. He is also a JSE Registered Securities Trader, and has worked on the trading desk at Sharenet. After seven-and-a-half years at Sharenet Mark then moved to Reitway Global (a specialist Global Listed Property Fund Manager) where his passion for property was further kindled. Mark currently works for Discovery Invest as an Investment Specialist on their Investec Managed fund offering. He has over ten years of experience in the equity and asset management sector and can be reached at: firstname.lastname@example.org
The views and opinions (where expressed) in this article are those of the author and do not necessarily reflect the official policy or position of Discovery Invest.