Stor-Age lifts 2023 payout 36% as self-storage demand surges

Stor-Age says self-storage sector has displayed remarkable resilience in coping with economic stresses.

Stor-Age, the JSE-listed self-storage property fund, has a business model that has proved resilient through economic crises, and its management has confidently predicted it would declare another dividend in its 2024 financial year.

Yesterday the group declared a full-year dividend of 118.14 cents per share for the year to March 31 – up 5.6% year on year. Management has forecast a dividend of between 115 and 121 cents for 2024.

“Although not immune to economic shocks and volatility, the self-storage sector has displayed remarkable resilience in coping with economic stresses, as evidenced during the global financial crisis and the Covid-19 pandemic,” CEO Gavin Lucas said in a statement yesterday.

Self storage benefits from a diverse set of demand drivers that remain present throughout all economic cycles. Demand is underpinned by life-changing events and dislocation, and customers use self storage for various reasons across economic cycles, Lucas said.

Despite the positive dividend, the share price fell 4.25% to R12.91 yesterday afternoon, but the price is only 10% below the R14.34 it traded at a year ago.

The group continued to execute on its growth strategy, acquiring five trading properties in South Africa and the UK, and opening two new developments in Morningside and Bath, in the UK.

“We have grown our portfolio since listing in 2015 – from 24 properties to 93 across both markets – increasing the value, including those managed in our joint venture (JV) partnerships from R1.3 billion to R12.9bn,” he said.

In South Africa same-store occupancy reached a record 92.2% at year-end, with same-store rental income increasing 9.8% year on year. In the UK, same-store occupancy was 85.4%, with rental income increasing by 8.9% compared to the prior period.

Occupancy in South Africa grew by 19 200 square metres with same-store occupancy up 10 000 square metres. After a strong performance in the first half, the UK traded in line with expectations, with occupancy growth for the full year of 2 000 square metres.

During the year Think Secure in Parklands, on Cape Town’s West Coast was acquired for R65 million. The JV portfolio continued to be developed through partnerships with institutional and private equity partners.

After year-end, trading commenced at the Morningside property, bringing 7 400 square metres at a cost of about R125m online. Progress was also made at the Bryanston, Pinelands and Paarden Eiland property developments. All four fall under the Nedbank JV.

Another property in Century City was under construction in a JV with Rabie Property Group. Collectively, the four projects represent a development cost of some R343m.

Lucas said while Stor-Age was not unaffected by load shedding, its properties were not crowded, have a small on-site staff complement and typically have low-energy consumption relative to other real estate types.

All of the properties have generators except for the three smallest by area, which have battery storage backup solutions. More than 40% have PV systems.

“We anticipate a three-year rollout across the portfolio at an estimated capex spend of R45m to R50m for fully integrated solutions that include PV systems, battery storage, and diesel generators,” said Lucas.

In the UK, Stor-Age opened its first property in the Moorfield JV located in Bath, in May. The property was completed for about £11.7m (R272.1m) Also as part of the JV, significant progress was made at their Heathrow, Canterbury and West Bromwich properties at an estimated cost of £36m. An additional property was also acquired in the Moorfield JV at a cost of £11.75 m in Acton, West London, after year-end.

A JV with Nuveen Real Estate was entered into and it completed the £82m acquisition of Easistore in the UK. The £82m was 50% funded with a five-year loan from NatWest, fixed at 5.64%. Stor-Age’s equity contribution in the acquisition was £4.4m.

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