Stor-Age Property Real Estate Investment Trust (Reit) has managed to grow its dividend 6% in its latest interim financial results, for the six months to end-September, as its business model withstands a weak South African economy. The largest self storage property fund in the country also has assets in the UK, an economy slipping into a recession.
Stor-Age’s portfolio comprises 86 self storage properties with 56 across both SA and 30 across the UK. The SA portfolio is valued at R5.1bn and the UK portfolio, under the brand Storage King, is worth R5.8bn or £290m. The group is the only specialised Stor-Age provider listed on the JSE.
A dividend per share 60.05 cents was declared for the six months to end-September 2022, up 6.10% from 56.60 cents for the six months to end-September 2021.
The company’s business model is underpinned by demand from people moving or in need of storage after life-changing events, such as divorce, downsizing, moving and emigration.
“In addition, the hybrid working model, new customer adoption, greater levels of mobility, micro-living, the growth of online retailers and protracted demand from existing customers renting for longer periods continues to underpin demand and higher occupancy levels,” Stor-Age said in a statement.
The company reported that rental income and net property operating income grew 18.6% and 16.5% respectively. Stor-Age achieved rental rate growth of 6.8% in the SA portfolio and 8.4% in the UK portfolio on a same-store basis. These were stores which have been open for at least a year.
The tangible net asset value of the group rose 10.5% to R14.47 per share. Its loan-to-value ratio sat at a very healthy 30.1% and over 85% of net debt was subject to interest rate hedging.
LTV measures a company’s debt relative to its assets and 40% is considered by fund managers in SA’s listed property industry to be the limit above which financial stress is felt on a balance sheet.
Stor-Age which was founded by its CEO Gavin Lucas, is growing through acquisitions and developments. Eight new properties four with each of Nedbank Property Partners and Moorfield in joint ventures, are scheduled to open over the next 18 months.
The company acquired Think Self Storage in Parklands Cape Town for R65m shortly after the end of September. Its SA development pipeline of ten properties was worth circa R900m and was more than 60 000m² in size.