Demand for self-storage lifts Stor-Age’s final dividend 4% more than its interim
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STOR-AGE, the only self-storage specialist real estate investment trust (Reit) listed on the JSE, lifted its final dividend 4 percent higher than the interim dividend to 54.08 cents as it continued to outperform the sector and JSE indices.
Rental income and net property income up 19.3 percent and 20.2 percent, respectively, for the year to March 31. Like-for-like rental income increased 8.6 percent in the South African portfolio, and 6.3 percent in the UK properties.
Total occupancy was at 90.1 percent. The investment property value increased 12.3 percent to R7.57 billion. Gearing was low at 24.1 percent.
“Since listing in November 2015, the number of properties has grown to 74 from 24 and the value has risen significantly from the starting value of R1.3bn,” said chief executive Gavin Lucas.
He said they were encouraged by the demand they were experiencing and the resilience of the business model and he was confident the company would manage the challenges that lay ahead.
Stor-Age forecast an increase in distributions for the year ahead of 3-4 percent.
The share price increased 1.35 percent to R13.56, a price that represented a 41 percent increase over 12 months. The JSE’s Listed Property Index, by comparison, was only up 1.8 percent on the same basis.
The cash position was strong with R471 million on hand. Some was raised by R250m in May 2020 in an oversubscribed book build.
A £50m (R959.1m) joint venture was entered into with the Moorfield Group to develop a portfolio of self-storage properties in London and south-east England. Moorfield is a UK-based private equity real estate group. Two development sites were secured subject to planning consent. A self-storage property in Blackpool was acquired in April this year.
“The JV is a springboard to building critical mass in the attractive UK self-storage market without over-committing capital,” said Lucas.
He attributed the company’s agility through the pandemic to its specialist sector skills, an industry-leading operating platform, and a high-quality property portfolio and digital capability. “These competitive advantages have enabled us to continue extracting occupancy and revenue growth in South Africa and the UK.”
South Africa and UK enquiries grew more than 20 percent.
Lucas said the continued development of digital capability meant Stor-Age could introduce an online sign-up feature, which was critical to new tenants in these contact-averse times.
Stor-Age’s secured development pipeline in South Africa comprised eight new properties at a development cost of about R685m. The Tyger Valley and Sunningdale developments were completed in Cape Town and opened in May 2021. The new Cresta store in Joburg was expected to begin trading in October this year.
He said the social and economic disruption caused by the pandemic had given rise to a new demand driver for self-storage.
Work-from-home, home improvements, migration in and out of the main cities, disruption to businesses and employment insecurity, and an acceleration of e-commerce, were all factors driving this demand, he said.
He said Stor-Age’s pilot last-mile delivery hub in Craighall was still in a proof-of-concept stage, but the results were encouraging.
Initially designed for up to 500 parcels per day, the hub had experienced peak daily volumes of 768 and average daily parcel volumes of 450 last month. The hub was driven off partner Picup’s tech platform and crowd-sourced driver network.
Stor-Age closed 0.45 percent higher at R13.44 on the JSE yesterday.