Johannesburg - Stor-Age Property, the largest self-storage property fund in South Africa, is developing four new storage buildings in line with its commitment to build a portfolio of high-quality self-storage assets.
Gavin Lucas, the chief executive of Stor-Age, said yesterday that three were being developed in Johannesburg in Sunninghill, Essexwold and Randburg and the fourth in Berea in Durban.
A 5 500 square metre gross lettable area expansion was also currently under way at its existing Gardens and Durbanville properties in Cape Town at a cost of R44 million, which is being funded from its existing debt facilities and is expected to be completed by January.
Stor-Age’s portfolio at end-March comprised 33 self-storage properties across South Africa, of which it owned and operated 24 valued at R1.4 billion. The balance represents the unlisted portfolio on which it receives property and asset management fees.
Lucas said Stor-Age had always operated at the quality end of the market and would not grow for the sake of growth alone. He believed this strategy would ensure the business model was highly defensive over the medium to long term as more competition came into the market.
Stor-Age yesterday reported total distributions to shareholders of R39m for the four-and-a-half months since listing to March, its maiden results. This translated into a distribution a share of 30c, which was 4.7 percent higher than forecast.
Above forecasts
Rental income totalled R54.9m, which was 3 percent higher than forecast.
The rental rate a square metre increased by an annualised 11.4 percent in the reporting period to R76.30 from R72.60 at listing.
Occupancies across the portfolio increased to 86 percent from 82.7 percent at listing, with the facilities boasting more than 14 300 tenants at year-end.
Lucas said constant demand for self-storage was the key driver of the fund’s commendable results and robust inquiry levels demonstrated that self storage sector fundamentals were attractive.
“While the global benchmark for a mature portfolio is 80 percent plus occupancy, we remain intent on improving our overall portfolio occupancy to 90 percent which we believe is optimal,” he said.
Lucas said Stor-Age’s performance followed the outperformance trend of self-storage real estate investment trusts (Reits) globally.
“In first-world markets, such as Australia, the UK and the US, self-storage Reits have consistently outperformed property sector indices and ranked at the top end of their respective markets,” he said.
However, Lucas said self-storage was still a developing market in first world countries and an unexplored market with explosive growth potential in emerging economies.
Stor-Age planned to grow in the short term through new developments and expansion, and in the medium term via a combination of these and acquisitions of existing self-storage properties from third parties.
‘Needs based’
However, Lucas said finding appropriate acquisitions was challenging given Stor-Age’s focus on quality, its scale and leadership of the market in South Africa.
Lucas said self-storage was a “needs based” product and the need prevailed in any economic cycle and he was confident that Stor-Age was well positioned to weather the economic headwinds in South Africa and global market volatility. He expected Stor-Age to achieve annualised dividend growth of 10 percent for the year to March next year.
Shares in Stor-Age closed unchanged at R9.50 yesterday on the JSE.
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