Highlights
• Final dividend of 55.30 cents per share
• Distributable income per share up 7.5%
• Total return of 16.5% (distribution and net tangible asset value growth per share)
• Rental income and net property operating income up 15.0% and 16.7% respectively
• Same-store rental income up 12.3% (SA 10.0%; UK 21.2%)
• Portfolio occupancy up 24 100m², closing at 88.1% (SA 88.1%; UK 88.3%)
• Same-store occupancy 90.0%+ in SA and the UK
• Loan-to-value ratio of 27.9%, net debt hedged 84.3%
• Net investment property value up 22.4% to R9.26 billion
• Raised R575 million in an oversubscribed accelerated bookbuild in January 2022
• Acquired 11 trading properties (SA 2; UK 9), completed three new developments in SA and
increased portfolio GLA by 56 500m²
• Development pipeline of 14 properties, secured four new opportunities (SA 2; UK 2)
• Nedbank JV – construction commenced at Morningside and Bryanston
• Moorfield JV – construction commenced at Heathrow and Bath
Highlighting the resilience of its operating model, JSE REIT Stor-Age, South Africa’s leading and largest self storage property fund, continued its track record of consistent earnings growth and
once again delivered an excellent operating and financial performance for the year ended 31 March 2022. The Group also continued to successfully execute its growth strategy, acquiring 11 trading properties across South Africa and the UK, as well as securing four new opportunities for future development, taking the total number of properties in the development pipeline to 14.
Stor-Age CEO Gavin Lucas said, “We’re proud to report that Stor-Age delivered another superb performance. Our prior financial year highlighted the resilience of our business model, while the current year was characterised by exceptional growth in our portfolio and record levels of demand. With a founderled executive management team, one that has been developing and operating self storage assets for more than 15 years, as well as being one of only 11 publicly traded self storage REITs globally, we continue to benefit from our deep sector specialisation, highly sophisticated operating platform and industry leading digital capability in South Africa and the UK.”
Off the back of strong demand, Stor-Age delivered growth in excess of 12% and 28% in same-store net property operating income in South Africa and the UK respectively. Total occupancy increased by 24 100m², and same-store occupancy closed above 90% in both markets. Driven by organic growth and the impact of acquisitions and new developments, Group rental income increased by 14% to R815 million, while on a same-store basis, SA and UK rental income increased by 10% and 21.2% respectively.
Comments Lucas, “The pandemic accelerated long-term trends and set in motion changes in remote work, e-commerce and automation, giving rise to additional new needs-based demand drivers for self storage. It’s evident that some emerging trends, such as hybrid working, have become more permanent in nature and will continue to drive demand and in turn enhance the pricing power within the sector. Self storage is also likely to continue to benefit from its market positioning as an alternative to traditional industrial and logistics space, as well as from increased use by SMMEs, effectively creating a long-term structural tailwind for the sector.”
The continued strong operational performance underpinned a healthy gain in property valuations and, together with acquisitions completed during the year, the value of Stor-Age’s 85 properties increased by approximately R1.7 billion to R9.5 billion at 31 March 2022.
Stor-Age continues to deploy capital strategically, adding quality and scale to its high-quality portfolio of self storage assets in both markets. During the year, Stor-Age concluded the acquisition of Silver Park Self Storage and Green Cube Self Storage, in Cape Town’s northern and southern suburbs respectively. Adding 13 100m2 GLA to the portfolio, the locations of the properties were complementary to the existing portfolio, and both present attractive upside through Stor-Age’s operating platform and asset management capability.
In the UK, the three acquisitions that Stor-Age completed during the year represented nine properties in total and added approximately 43 000m² GLA to the portfolio at a combined purchase price of over £100 million. The most recent of the acquisitions, Storagebase, was secured in March 2022 at a purchase consideration of £59 million as part of a joint venture (‘JV’) with Moorfield Group (‘Moorfield’). The highquality portfolio consisted of predominantly modern, bespoke, purpose-built properties and is located in the south of England and the West Midlands.
The acquisition formed part of an existing JV with Moorfield to assemble a portfolio of high-quality self storage properties in prime locations throughout England. Stor-Age has a 24.9% equity interest in the JV and earns management fees for acquiring, developing and managing properties therein. The Storagebase acquisition followed shortly after the acquisition of a regionally dominant four-property portfolio in Yorkshire from McCarthy’s Storage World (‘McCarthy’s’). The acquisition was concluded in January 2022 at a purchase price of £37.5 million.
Comments Lucas, “Stor-Age made a strategic entry into the UK in November 2017. Subsequently, we’ve seen Storage King deliver highly attractive operating results year after year, as well as grow significantly, from 13 properties to 30, with a further four properties secured in the development pipeline. The operational strength and performance over multiple years, along with our success in identifying, negotiating, and closing acquisitions in a highly competitive developed market economy, demonstrates the strength, competitiveness, and sophistication of our UK platform. With total Group asset exposure now more than 50% weighted to UK assets and continuing to grow, Stor-Age is superbly positioned to continue executing its growth strategy in the UK.”
Three new developments were also completed during the year in South Africa, in Tyger Valley, Cresta and Sunningdale, adding approximately 21 000m2 GLA to the portfolio. A further two properties are under construction, in Morningside and Bryanston. Both of these properties are being developed as part of a JV with Nedbank Corporate and Investment Bank.
In the UK, the Moorfield JV is progressing well, with construction underway at a new purpose-built flagship property in Heathrow, as well as at an existing property in Bath which is being converted into self storage. With an additional four development sites secured during the year, Stor-Age benefits from having a significant pipeline of 14 prime properties for future development across both markets (SA 10; UK 4).
Stor-Age continues to benefit from a well-managed and conservative capital structure that makes use of moderate levels of debt and a multi-year forward interest rate hedging policy. In support of its balance sheet strategy, in January 2022 it proactively bolstered its liquidity position by securing R575 million of new equity in a significantly oversubscribed accelerated bookbuild.
The conservative management of the balance sheet allows for the consistent execution of the growth strategy and also ensures that Stor-Age has the flexibility to take advantage of market opportunities as they present themselves. At year end, Stor-Age had a loan-to-value ratio of 27.9%, with 84.3% of its net debt hedged for a remaining average 3.5 years.
Concludes Lucas, “As we look to the year ahead, we remain conscious of the risks and unpredictable economic outcomes that sit outside of our control. Developed and emerging economies alike are experiencing accelerating inflation and continuing supply chain disruptions and production shortages, with these challenges being magnified by recent geopolitical events. Regardless of how these matters play themselves out, Stor-Age and the self storage business model have a track record of resilience in constrained economic environments, with a diverse and deep set of demand drivers present throughout the different economic cycles. Accordingly, we are well positioned to deal with these uncertainties, continue with the execution of our operating and growth strategies, as well as to take advantage of any market opportunities that may present themselves.”
The board anticipates low to mid single-digit dividend per share growth (assuming a 100% pay-out ratio) for the financial year ahead.
The share closed on Friday at R14.17.
