Ac­qui­si­tions ex­pected to lift Stor-Age dis­tri­bu­tions growth

Pretoria News - - COMPANIES - Sandile Mchunu

SOUTH Africa’s largest self stor­age group, Stor-Age Prop­erty Reit, ac­quired All-Store in Cape Town’s north­ern sub­urbs for R52 mil­lion in March.

The group said the ac­qui­si­tion was, how­ever, post its re­port­ing pe­riod for the fi­nan­cial year-end to March. The group said All-Store of­fered 5 500m² Gross Let­table Area (GLA), with an ad­di­tional 1 600m² al­ready un­der development.

It said the All-Store pur­chase came on the back of ma­jor ac­qui­si­tions made in 2017, in­clud­ing Stor­age RSA, Unit Self Stor­age and StorTown in South Africa, as well as Stor­age King in the UK – tak­ing its to­tal ac­qui­si­tions in the past 18 months to five. The group said that de­spite the trans­ac­tions, its gear­ing ra­tio re­mained con­ser­va­tive at 16 per­cent.

Chief ex­ec­u­tive Gavin Lu­cas said: “Th­ese ac­qui­si­tions have demon­strated not only our abil­ity to iden­tify and then close value-add trans­ac­tions, but also our abil­ity to in­te­grate newly ac­quired trad­ing stores seam­lessly on to our op­er­at­ing platform.”

The group said the ac­qui­si­tions were in­stru­men­tal in in­creas­ing the to­tal GLA by 77per­cent to more than 321 000m² since its list­ing in Novem­ber 2015. It said the value of prop­er­ties also rose three­fold to R3.9 bil­lion in mar­ket cap­i­tal­i­sa­tion as at the end of March.

Stor-Age re­ported an 86.1 per­cent in­crease in to­tal prop­erty rev­enue to R310.2 mil­lion for the year to end March, up from R166.7m, while rental in­come was up by 86 per­cent to R295.4m, up from R158.8m com­pared with last year. On a like­for-like ba­sis, ex­clud­ing ac­qui­si­tions, rental in­come in­creased 10.6 per­cent to R171.5m, driven by a 1.8 per­cent in­crease in av­er­age oc­cu­pancy lev­els and an 8.8 per­cent in­crease in the av­er­age rental rate.

Op­er­at­ing profit in­creased by 86.5 per­cent to R218.4m, up from R117.1m. Profit more than dou­bled to R576.7m as com­pared to last year’s R240.7m.

The group de­clared a to­tal div­i­dend of 97.83 cents a share, up by 11.1 per­cent from last year.

Lu­cas de­scribed the sig­nif­i­cant in­creases in prop­erty rev­enue and op­er­at­ing profit of 86.1 per­cent and 86.5 per­cent re­spec­tively as ex­cel­lent, given the pre­vail­ing macroe­co­nomic en­vi­ron­ment and chal­lenged lo­cal prop­erty sec­tor.

He said while the group had been on the ac­qui­si­tion trail both lo­cally and abroad, a sig­nif­i­cant por­tion of earn­ings growth con­tin­ued to come from the ex­ist­ing port­fo­lio.

He said while the lo­cal econ­omy was show­ing signs of im­proved con­sumer and busi­ness sen­ti­ment, it was yet to trans­late into mean­ing­ful ac­tiv­ity.

“How­ever, ir­re­spec­tive of the macro con­di­tions, we have in place a ro­bust bal­ance sheet with low gear­ing, en­abling the group to con­tinue pur­su­ing earn­ings-en­hanc­ing op­por­tu­ni­ties,” Lu­cas said. “Cou­pled with our large, qual­ity prop­erty port­fo­lio and so­phis­ti­cated op­er­a­tional platform, this should en­able Stor-Age to con­tinue de­liv­er­ing sus­tain­able dis­tri­bu­tion growth.” Lu­cas said he an­tic­i­pated a dis­tri­bu­tions growth of be­tween 9 and 10 per­cent in the next fi­nan­cial year

Stor-Age rose 1.56 per­cent on the JSE yes­ter­day to close at R13.

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