Self-storage property fund Stor-Age jumped just over 6% on the JSE on Tuesday, after its half-year to the end of September 2021 showed another strong financial performance.
Its share price closed at a 52-week high of R14.79.
Stor-Age not only declared an interim dividend of 56.60 cents per share, but also reported an 8.85% increase in its dividend per share (dps) and has opted to give the market “guidance” by forecasting growth in distributions of between 6% and 8% for its full-year.
The Cape Town-headquartered group, which has self-storage operations in SA’s major cities as well as investments in the UK, continues to defy market conditions and outperform its JSE-listed peers, most of which focus on the retail, office and industrial property sectors.
Some of these peers continue to withhold interim or full-year dividends in the face of the Covid-19 financial fallout.
Most property counters continue to report drops in dps – the key performance measure for real estate investment trusts (Reits). And very few are bold enough to give guidance to the market regarding future performance or dps growth, claiming ongoing uncertainty around the pandemic.
Stor-Age reported rental income and net property operating income increasing by 13.1% and 20.1%, respectively for the half-year.
This is despite some impact on its operations due to the July unrest in KwaZulu-Natal.
Like-for-like rental income was up 11.6% in SA and surged 23.8% in the UK.
The fund’s strong operational performance saw its net investment property value increase by 9.3%, to just over R7.95 billion. This is another key metric in which it has outperformed the market, with several JSE-listed Reits still reporting property devaluations or write-downs.
Stor-Age also has a sector-low gearing or loan-to-value ratio of 25%.
Its South African development pipeline (10 property developments) is around R850 million, including the recently announced joint venture with Nedbank to develop two new self-storage facilities.
The group says its excellent performance was driven by strong demand, growth in occupancy and rental rates, and disciplined cost control at a property level.
“The period was not without its challenges, as the [Covid-19] third wave and lockdown restrictions in SA slowed down the economic recovery from the shock of 2020, while the civil unrest in KwaZulu-Natal resulted in significant damage to the group’s Waterfall [west of Durban] property,” it adds in a media statement.
Stor-Age CEO Gavin Lucas comments: “Over the past 18 months, the ongoing resilience of Stor-Age’s business model was tested and once again proven as the Covid-19 pandemic unleashed economic and social upheaval and forced individuals and businesses to deal with new challenges.
“Notwithstanding these challenges, we made progress in all areas of our strategy during the period, namely organic growth, a strong acquisition pipeline, high-quality developments and expansion projects, while also entering into our first environmentally-friendly sustainability-linked loan facility and continuing to embrace technology and innovation to drive further efficiencies and economies of scale.”
Lucas says that since Stor-Age’s listing on the JSE in November 2015, the number of properties in the fund’s portfolio has grown from 24 to 76, with the value having risen more than fivefold.
He says despite the continued disruption and negative economic impact of the pandemic, Stor-Age’s disciplined growth strategy in SA and the UK remains unchanged and it will continue to expand its footprint in both markets.
Commenting on Stor-Age’s interim results, Kundayi Munzara, an executive director and portfolio manager at Sesfikile Capital, says the strong performance was driven by significant rate growth occupancy gains in the fund’s UK business.
“The pandemic gave rise to new demand drivers for self-storage, in addition to traditional demand for the product.
“The company is well positioned to grow organically as well as through an active development pipeline in SA and UK,” he points out.
“We also believe the sector is well geared for a structural step-change in occupancies as we have seen in the US, with occupancies in the mid-90s, up from what was viewed as a previous peak of 89% to 92%,” adds Munzara.