Stor-Age model resilient - reaches joint venture with Nedbank
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STOR-AGE, South Africa’s largest self-storage property fund, said yesterday that its average rental rate had increased by 7.1 percent year-on-year on a like-for-like basis for the five months to August 31 and the business model continued to demonstrate resilience.
Occupancy increased by 3 percent, the group said in a business update yesterday.
In the UK, like-for-like basis to August 31, the average rental rate increased by 5.7 percent year-on-year, while total occupancy increased by 10.4 percent.
Stor-Age had agreed terms to enter a joint venture with Nedbank Corporate and Investment Bank, acting through Nedbank Property Partners, to develop two properties in Morningside and Bryanston at a cost of about R200 million.
Construction was scheduled to start at both properties in the second half of the 2022 financial year.
A characteristic of the self-storage development model is the lease-up of newly developed properties to a stabilised and mature level of occupancy, with the lease-up forming a big component of a property’s overall formation cost.
To mitigate the lease-up impact, it was better for Stor-Age to develop new properties with a development partner.
Stor-Age’s development pipeline comprises eight properties at a total cost of about R685m.
The pipeline represents about 12.5 percent of the total South African portfolio gross lettable area as reported at March 31 this year.
Meanwhile, Stor-Age had acquired two trading self-storage properties in Cape Town’s northern and southern suburbs.
Silver Park Self Storage in Brackenfell was secured for R60.1m, while the second property, acquired for R48m, offered services in the broader Ottery, Plumstead and Wynberg areas.
To broaden debt-funding sources to support the growth of Storage King in the UK, a refinance process was initiated with UK lenders and was nearing completion.
Stor-Age Waterfall located in Hillcrest, KwaZulu-Natal, had been extensively looted in the July violence and certain parts of the property were set on fire.
About 60 percent of the letting area suffered “significant structural damage” and these buildings required demolition and rebuild. A R83m claim plus VAT had been submitted to Sasria.
Those parts of the property least impacted and where repairs had taken place were scheduled to reopen next month.