Stor-Age locks up a strong first half


Stor-Age locks up a strong first half


Published Date: 2019-11-20 | Source: Stephen Gunnion | Author: Stephen Gunnion

Stor-Age locks up a strong first half

The self storage property fund says its defensive business model will help support it despite challenging conditions in SA and the UK.

Stor-Age has long maintained that it operates in a niche that is cyclically resilient even when the property sector is under pressure. It's backed that claim up with strong first-half growth and a 7% increase in its interim dividend.

The real estate investment trust (REIT) is the largest self storage property fund on the JSE. It has a portfolio of 66 self storage properties across SA and the UK. Its 50 SA properties are worth R4.2 billion, while its 16 properties in the UK operating under the Storage King brand are valued at R2 billion. A further 12 UK properties are licenced to trade under the Storage King brand and generate licence and management fee revenue for the group.

In the six months to end-September, its SA portfolio continued to record solid occupancy gains and rental rate growth despite increasing pressure on consumers and the stagnant economy. In the UK, occupancies reached a record closing level of 84.2%, with two acquisitions made in March now integrated into the group.

Property revenue increased by 45% to R331 million in the six months to end-September, with just over a third of that attributable to Storage King in the UK. Rental income improved by 40% to R293 million and was 7% higher on a like-for-like basis, excluding acquisitions of the past couple of periods. It said the improvement was driven by a 1.5% increase in average occupancy levels and a 5.5% increase in the average rental rate.

Distributable earnings rose 24% to R214 million. It grew headline earnings per share by 18% to 43.5c and it's raised its interim dividend by 7% to 54.89c per share.

Following this week's £13.4m acquisition of Flexi Store Self Storage the UK, the REIT said its portfolio would swell to 71 properties with a value of R6.4 billion. It said gearing of 27.3% left it with headroom to pursue more development and acquisition opportunities that might arise. Its gearing, or loan to value, is calculated as the ratio of net debt as a percentage of gross investment property less lease obligations.

Stor-Age said there was little prospect of improvement in the local economy in the short to medium term, while the UK would continue to face a protracted period of uncertainty as the impasse on the terms of Brexit continued.


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