Stor-Age meets changing needs
Self-storage property fund Stor-Age is flourishing amid high inflation worldwide, interest rate hikes and the energy crisis in Europe. Its business model is underpinned by demand from people moving or in need of storage after life-changing events, such as death, separation, downsizing, moving and emigration.
Self-storage property fund StorAge is flourishing amid high inflation worldwide, interest rate hikes and the energy crisis in Europe. Its business model is underpinned by demand from people moving or in need of storage after life-changing events, such as death, separation, 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 continue to underpin demand and higher occupancy levels,” the company said on Tuesday in its interim results.
“These trends are particularly prevalent in high-density urban areas where the majority of our properties are located.”
The average length of stay for residential and commercial customers in SA went up 11% and 23%, respectively, from prepandemic levels.
In the UK, residential jumped 9% and commercial 15%.
Stor-Age is SA’s only specialist self-storage real estate investment trust and the owner of UK self-storage brand Storage King. It is differentiated by its quality properties located in areas with high visibility to passing traffic, easy access off busy arterial routes and proximity to middle- to upper-income suburbs.
Its portfolio has 86 self-storage properties in SA (56) and the UK (30). The SA portfolio is valued at R5.1bn and the UK portfolio at R5.9bn (£290m).
Close to three-quarters of its gross lettable area is in SA at 390,600m², with 129,600m² in the UK.
The company, valued at R6.4bn on the JSE, declared an interim dividend of 60.05c for the six months to end-September, a 6.1% increase year on year, and distributable earnings rose 16.3% to R285m. The board anticipates its dividend growing about 5%-6% for the financial year end-March.
Stor-Age has 10 properties in its SA development pipeline to the tune of about R900m with over 60,000m² gross lettable area — about the size of eight football pitches.
But its strategy of organic growth is being impeded by town planning and the approval processes in SA and the UK “particularly in high-density areas” as it is “complex and time consuming”. It said: “The intricacies of securing development sites and gaining the requisite planning and approval consents is a significant barrier to entry for new supply.”
Stor-Age noted the self-storage market in the UK remains less developed than the US and Australia. According to a survey by the UK Self Storage Association published in May, the supply of self-storage space is estimated to be 0.76ft² per head of population in the UK versus 10ft² in the US and 2ft² in Australia.