Stor-Age says it is well-positioned to continue executing its growth strategy and achieving robust financial performance in March 2023 despite macroeconomic challenges in SA and the UK.
For the first five months of the 2023 financial year, as well as the 12-month trading period ended August 31, Stor-Age reported strong portfolio performance along with high occupancies.
“The self-storage sector in SA and the UK continues to benefit from structural tailwinds, evidencing itself at the property level in the form of high levels of demand,” said Stor-Age CEO Gavin Lucas.
Lucas said self storage is one of the few commercial property sub-sectors that is well-placed to navigate a high inflationary environment.
He said their quality portfolio and sophisticated operating model in SA enabled the company to deliver strong same-store gains in occupancy and healthy average rental increases.
In the UK, Stor-Age maintained high occupancies and achieved attractive levels of same-store average rental rate growth in excess of 10%.
Quality products
Stor-Age is SA’s only specialist self-storage real estate investment trust (Reit). It listed on the JSE in 2015 with 24 properties valued at R1.3bn. Its SA and UK portfolio have grown more than sevenfold to R10.2bn, including trading properties held in joint-venture partnerships and managed by the group.
Stor-Age also owns the sixth largest UK self-storage brand, Storage King, with the portfolio representing over 50% of the group’s property assets by value.
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.
Stor-Age’s 85 properties in SA and the UK delivered growth in occupied space of 57,600m² year-on-year, and achieved average rental increase rate of 6.7% in SA and 10.8% in the UK year-on-year.
Lucas said despite their average length of stay of about two years for customers still storing their goods at their properties, the short nature of the leasing cycle with new leases entered into monthly, provides the sector with the opportunity to adjust its pricing in near real-time.
“For those operators with a sophisticated and dynamic revenue=management model such as Stor-Age, it provides us with an opportunity to be very defensive relative to our peers across the broader commercial property market,” said Lucas.
The self-storage sector in SA and the UK continues to benefit from structural tailwinds, evidencing itself at the property level in the form of high levels of demand.
As at March 31, its development pipeline in SA and the UK comprises 14 properties. SA has the bulk of the pipeline [10] with development costs of R900m, including two properties in Johannesburg and two in Cape Town now under construction.
In May 2022, Stor-Age acquired a self-storage property in Parklands Cape Town for a R65m.
The UK total development is £45m. The construction of the two properties at Heathrow in west London and Bath are now under way. Both properties are scheduled to open in the first quarter of 2024 financial year.
Stor-Age is developing four other properties in south east of England, and West Midlands in a joint venture partnership with Moorfield in which Stor-Age holds a 25% stake.
Lucas said the company continues to seek opportunities to unlock value in the existing UK portfolio through new developments and extensions.
“Together with our excellent trading results delivered year to date, the ongoing conservative management of our balance sheet has once again positioned us well as we encounter a rising interest rate cycle,” said Lucas.
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