Acquisitions expected to lift Stor-Age distributions growth
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.