JSE REIT Stor-Age, South Africa’s leading and largest self storage property fund, maintained its resilient financial performance for the six months to September 2024, delivering growth in its distributable income per share of 3.5%. On the back of another excellent operational performance at the property level, Stor-Age continued its track record of consistent earnings growth. The Company continued executing its strategic growth strategy, adding a further 10 properties to the portfolio over the past 12 months, taking the total number of properties to 107.

Stor-Age CEO Gavin Lucas commented, “Stor-Age has once again delivered an impressive financial and operational performance over the past six months. We continued to expand our portfolio, opening eight properties during the period and increasing the combined value of the portfolio, including properties managed in our JV partnerships, to R17.4 billion. In the nine year period since listing on the JSE in November 2015, we have grown our portfolio by 83 properties and outperformed the SA Property Yield Index, or SAPY, by 150%.”

The South African portfolio continued to outperform, with rental income and net property operating income increasing by 10.8% and 12.0% respectively compared to the prior year. Average occupancy and rental rates increased by 2.4% and 8.2% respectively, with occupancy in the same-store portfolio of owned properties growing by 8 900m² year-on-year.

After a challenging FY24 in the UK, Stor-Age delivered an equally pleasing set of results for the period. Rental income increased by 6.8%, with average occupancy and rental rates up 4.3% and 2.4% year-on-year respectively. Occupancy in the owned portfolio increased by 3 300m² year-on-year and net property operating income was up 7.4% compared to the prior year.

Stor-Age has a long and successful track record of acquiring, developing and managing self storage properties in prime locations which have delivered high occupancy and rental rate growth. Over the past 12 months, the Company has opened 10 new properties across both markets. This included five new developments completed in JV partnerships (two in SA and three in the UK), four properties added to the third-party management platform in the UK and the acquisition of Extra Attic in South Africa in September 2024.

Comments Lucas, “We continue to work with our JV partners to assess future acquisition, development and redevelopment opportunities. These partnerships are a key focus for the Group as we seek to source additional capital and development opportunities to deliver mutually beneficial outcomes for both Stor-Age and our partners. We remain confident that the long-term return profile on invested capital through our JV partnerships will be value-accretive as new developments lease up to mature occupancy levels.”

The Company has remained focused on its third-party management offering. A total of 26 properties are operating on this platform, 18 of which are in the UK. During the period, Stor-Age entered into a third-party management agreement with Hines to manage their acquisition of a self storage portfolio of three properties in the UK. Hines is a privately owned global real estate investment manager who own and operate US$93 billion of assets across property types and on behalf of a diverse group of institutional and private wealth clients. Stor-Age continues to work closely with Hines as they seek to deploy capital and build scale in the self storage market.

The Company’s loan-to-value ratio was 31.3% at period end, with 81.2% of net debt subject to interest rate hedging. In April 2024, Stor-Age raised R500 million in a debt auction allowing the Group to increase funding capacity, extend maturities and diversify funding sources. Noted Lucas, “While Stor-Age continues to benefit from a conservatively managed and interest rate hedged balance sheet, we do need to acknowledge the negative impact of the higher interest rate environment. While we have seen the first rate cut in South Africa and we saw a second rate cut last week in the UK, the cost of debt funding remains high. At an EBITDA level, we delivered attractive year-on-year growth of 7.9%, or R32.2 million, however net finance costs were up 21.8%, meaning that the R22.1 million increase in net finance costs effectively diminished our distributable income performance.”

Stor-Age has also continued its focus on environmental sustainability, further expanding its solar PV roll-out strategy across the South African and UK portfolios. To date, the Company has invested R72 million into renewable energy, generating over 7.7 million kWh of solar power. Currently, 60% of the portfolio has solar capacity installed.

Concluded Lucas, “We are well positioned from a strategic, financial and operational perspective as we approach the second half of FY25. We expect our South African portfolio to continue its positive growth trajectory for the remainder of the financial year, and we remain cautiously optimistic that our UK portfolio will deliver a robust set of results for the full financial year. Although competitive move-in pricing dynamics remain prevalent in the UK market, we are satisfied with our operating performance to date and remain confident in our ability to navigate the challenges that lie ahead.”

Stor-Age reaffirmed its FY25 full year forecast of distributable income per share to be between 122 to 126 cents.

The share closed on Friday at R14.95.

Key highlights for the period:

• Earnings and total returns: Distributable income per share up 3.5% to 63.51 cents, with an interim dividend declared of 57.16 cents per share (90% payout ratio) and a total return of 10.91%¹
• Financial performance: Same-store net property operating income up 9.6%, occupancy up 12 200m² and net investment property value up 5.4% to R11.5 billion
• Portfolio growth: Added 10 properties, with the portfolio including the pipeline and ongoing developments now exceeding 680 000m². The growth includes five new developments, four third-party managed properties in the UK and the acquisition of Extra Attic in SA in September 2024
• Strategic partnerships: Entered third-party management agreement with Hines in May 2024. Total of 26 properties now under third-party management
• Balance sheet management: Successful debt auction raised R500 million below price guidance in April 2024, with a loan-to-value ratio of 31.3% and 81.2% of net debt subject to interest rate hedging
• Environmental sustainability: Expanded solar PV roll-out, investing an additional R8.5 million during the period, with 60% of the portfolio now fitted with solar
• Future outlook: Remain confident in business model’s resilience, reaffirming FY25 full-year forecast of distributable income per share of 122 to 126 cents

¹ 12-month dividend per share plus the increase in SA REIT net asset value (NAV) per share (for the 12-month period) as a percentage of SA REIT NAV at the start of the 12-month period

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