Property Flash


January 9 2023

It’s difficult to pick which property stocks will excel compared with their rivals, but Stor-Age stands out as a fund which should see its share price and dividends appreciate.

Stor-Age Property Real Estate Investment Trust (Reit) is set to expand in SA as more people downscale and need to stow goods, and in the UK; with Britons wanting to place seasonal items such as holiday skis and clothing in storage when they are not in use.

The Reit which was listed in October 2015, with assets worth R1.3bn, has been a tenacious success. Before it was listed by CEO Gavin Lucas and the rest of the original management team, SA’s largest real estate company, Growthpoint Properties tried to buy out the private business. However, Lucas and his partners grew the Reit, buying the UK business Storage King in 2017.

Storage Reit now has a market capitalisation of R6.5bn and assets worth R9.8bn, making it a mid-sized stock in SA’s listed property sector. The company’s pipeline is also very healthy and attractive.

“Our secured development pipeline in SA comprises 10 properties with an approximate development cost of R900m, which will add an estimated 60 000m² plus of gross lettable area (GLA) to the portfolio,” the group said late in 2022.

In total, its portfolio of 86 properties measure in excess of 520,000m² of GLA; half of a substantial business district. More than 14 properties are in the development pipeline. Storage King is now the sixth largest personal storage company in Britain. More than half of Stor-Age Reit’s portfolio by value is in the UK.

Lucas’ argument that there are highly varied and growing reasons why people choose to store their goods in units separate from their homes and that therefore demand for these units is ever rising, holds strong. Some people are downsizing because they are battling financially while others are doing so because they’d rather spend their money on travel, education, expensive toys or entertainment and other experiences. This is true in the UK which is experiencing a cost of living crisis and in SA, where people are battling to make mortgage payments, to pay school fees and have had to downgrade in terms of the quality and brands of food they eat.

Stor-Age also developed a micro-warehousing business in 2022 as it looked to diversify its revenue streams. Essentially, Stor-Age would convert some of its appropriate storage assets into warehouses for specialised clients.

The company listed at a share price of R9.89 in November 2015 and closed at R13.72 at the end of Friday January 6 2023; representing 39% growth. The company has regularly managed to grow its dividends at better than consumer price inflation growth rates and its loan-to-value (LTV) which measures its debt level relative to its asset base, is healthy at around 30%. Stor-Age Property Reit is on a healthy trajectory into 2023 and beyond.

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