Stor-Age rides pandemic storm, lifts dividend 5%
CAPE TOWN – JSE REIT Stor-Age, South Africa’s largest self-storage property fund, lifted its dividend a robust 5 percent to R1.12 a share for the year to March, in spite of the negative impacts of the Covid-19 pandemic. Most JSE-listed Reits are struggling to even declare dividends due to the impact of the pandemic.
In April and the last month, the company collected more than 93 and 98 percent of rentals in South Africa and the UK, respectively. A total of R250 million was raised in an oversubscribed book build in May. Rental income and net property operating income were up 29.7 and 34.1 percent, respectively.
Chief executive Gavin Lucas said yesterday that Stor-Age’s operational performance in both South Africa and the UK remained strong.
Stor-Age has grown its dividends every year since listing in November 2015. Assuming an investor invested R100 on listing day on June 19 this year and provided the full pre-tax dividends were reinvested, the investment would be worth R196.75 compared with the same investment in the JSE All Share Index worth R123.20 or in the SA Property Index now worth R60.69.
Since listing, the portfolio had risen from 24 properties to 71, with gross letting area almost quadrupling to 448 200m² and property value increasing from R1.3 billion to R7bn.
South African occupancy closed the period at 85 percent, while the UK’s stood at 78.8 percent. Total property revenue grew 32 percent to R698.8m, including acquisitive growth.
The closing South African rental rate was up 6 percent, and on a like-for-like basis rental income increased by 6.5 percent in South Africa.
The Craighall property opened in August last year and the group broke ground in Tyger Valley and Cresta. A joint venture was concluded with Garden Cities to develop a new property in Sunningdale, Cape Town.
In the period, Stor-Age launched a third-party management product in the UK that enabled it to leverage its existing infrastructure to generate a new revenue stream by supporting smaller operators in the UK who lack the benefits of scale.
The company also entered into a development joint venture with a UK private equity property group to co-develop new high-profile properties in London and the South East.
Gearing of 30.1 percent was within the intended range of 25-35 percent, and at the low end of the industry benchmark.
“The Covid-19 pandemic has caused uncertainty and disruption, exacerbated in South Africa by sovereign credit downgrades and a deepening recession. However, self-storage is uniquely-positioned to support life-changing events that lead to fundamental shifts in how consumers behave and how businesses operate, whether that be downscaling, the adoption of work-from-home due to the forced change in the commercial office sector or the increase in demand of e-commerce.”
Demand levels for self-storage at the group in South Africa and the UK in May and June month-to-date, were in line with pre-lockdown expectations, and to add, ahead of the same period last year in both countries.
Lucas said Stor-Age would continue to pursue selective growth opportunities in both markets, with acquisitions and new developments a priority.
Stor-Age's share price closed unchanged at R14.50 on the JSE on Monday.