Economic dislocation caused by Covid-19 has increased demand for storage due to the work-from-home trend, housing market activity, migration, disruption to businesses and the transitory nature of work. Photo: Supplied
Economic dislocation caused by Covid-19 has increased demand for storage due to the work-from-home trend, housing market activity, migration, disruption to businesses and the transitory nature of work. Photo: Supplied

Stor-Age gains from SA, UK economic dislocation

By Edward West Time of article published Jan 26, 2021

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CAPE TOWN - ECONOMIC dislocation caused by Covid-19 has increased demand for storage due to the work-from-home trend, housing market activity, migration, disruption to businesses and the transitory nature of work.

This was according to Stor-Age Property Reit, the leading and largest self-storage property fund, which said in a third-quarter trading update yesterday that when job losses occur and workers face increasing economic insecurity, mobility tended to increase as people relocate for better economic prospects or more affordable living situations.

“These transitioning households tend to increase demand for self-storage, a dynamic well-demonstrated during the ongoing pandemic,” the group said in the update.

Stor-Age’s share price closed 1.43 percent higher at R13.52 on the JSE yesterday, trading at a price:earnings ratio of more than 24, which is a relatively high rating for a listed property company currently.

“The results for the third quarter again demonstrated self-storage to be an exceptionally resilient business with the positive momentum in occupancy and inquiries continuing into the three-month period to December 31, 2020,” the group said.

Occupancy in the quarter increased by 3 percent to finish at 89 percent, with occupied space increasing by 13 500m2 over the period.

The year-to-date occupancy gain for the nine months to end-December 31 was 23 600m2, which represented an increase of 5.3 percent.

Enquiries increased by 22 and 40 percent year-on-year in South Africa and the UK respectively, driving a big increase in move-in activity.

Move-ins in South Africa increased 10.1 percent year-on-year which, together with a 3.2 percent decrease in move-outs compared with the prior year, resulted in an occupancy gain of 11 300m2.

In the UK, move-ins rose 29.6 percent year-on-year, with move-outs lower than expected. This saw a net gain of 2 200m2 for the quarter compared with an occupancy loss of 1 300m2 the prior year. Some 96 percent and 98 percent of rentals due in South Africa and the UK were collected respectively in the quarter.

The closing average rental rate increased by 8 percent and 0.7 percent annualised, in the third quarter for South Africa and the UK respectively, which reflected the resumption of price increases for existing customers.

Also, higher occupancy levels and strong demand allowed rental rates increases for new customers at certain properties.

Many SME businesses also had to temporarily close through the crisis, shut down, adapt to social distancing requirements or relocate and seek flexibility in their space requirements.

In September last year, the group entered into a joint venture with Moorfield Group to develop self-storage properties, focused on London and the south-east of England.

Stor-Age has a 24.9 percent equity interest in the joint venture. Moorfield is a leading UK real estate fund manager.

Stor-Age had risen 1.43 percent to R13.52 at the close of the JSE yesterday.

BUSINESS REPORT

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