In the face of most of its fellow JSE-listed property groups withholding or deferring dividends due to Covid-19 uncertainty, Stor-Age Property Reit (real estate investment trust) has decided to pay out final dividends for the full-year to the end of March 2020.
South Africa’s largest and only JSE-listed self-storage property fund reported strong full-year results on Monday, with its total dividend per share (DPS) up 5.03%, to 112.05 cents for the year.
While lower than its initial forecast of 7-9% DPS growth, Stor-Age still outperformed the broader listed property sector. The group’s results, together with its strong balance sheet, gave it space to declare dividends for the second half of its financial year.
Nevertheless, the group has given shareholders the choice of either cashing in the dividend or reinvesting it in the company. This is not the first time the group has offered a dividend reinvestment plan (Drip) option to shareholders, however, it hopes to see a fair amount reinvested as it positions itself for growth despite Covid-19.
“Self-storage has been resilient even in the face of Covid-19,” said CEO Gavin Lucas during a results presentation on Monday.
“In fact, we see opportunities coming out of the crisis, as both businesses and individuals look to downsize. This will no doubt lead to higher demand for self-storage space.”
He pointed out that despite the negative impacts of the Covid-19 pandemic and lockdown, the group collected over 93% and 98% of rentals due in SA and the UK respectively for the two months since its year-end (April and May). It also raised R250 million in a “significantly oversubscribed” capital raise in May.
“Stor-Age’s operational performance in both geographies remained strong against a backdrop of economic uncertainty,” said Lucas. “Our intensified operational focus and discipline at property level, supported by our digital marketing capabilities, generated ongoing occupancy and revenue growth. We believe that our hands-on management involvement is a key competitive driver of the group’s performance.”
Since its JSE listing in November 2015, the group’s tally of properties has risen from 24 to 71, while the total value of the portfolio has increased from R1.3 billion to R7 billion. Compared to other hard-hit property counters that are invested in office, retail or industrial properties, Stor-Age’s share price has also been relatively stable over the last year. In fact, it is up just over 2% over the period.
Lucas credits Stor-Age’s “competitive strength” to its disciplined portfolio management and its specialisation in the self-storage sector, which is a burgeoning real estate sub-sector both locally and globally.
“Stor-Age has maintained an uninterrupted dividend trajectory since listing,” he said.
An investment of R100 the day the fund listed in 2015 would have grown to R196.75 as at Friday (June 19) provided the full pre-tax dividends had been reinvested, he added. The same investment in the JSE All Share Index or SA Property Index would be worth R123.20 and R60.69 respectively.
The fund’s SA occupancy levels closed at 85% for the year in review, while occupancies in the UK closed at 78.8%. Total property revenue grew 32% to R698.8 million, including organic and acquisitive growth.
Lucas said Stor-Age has a healthy balance sheet, with its gearing or loan-to-value (LTV) ratio sitting at 30.1%, which is at the low end of the industry benchmark.
“This calculation was before taking into account the positive impact of the R250 million new equity raised post year-end.”
Kelly Ward, an investment analyst at Metope Investment Managers, noted that the group’s results were for the year ending in March, before the real impact of Covid-19.
“The results do not significantly take into account the impact of the pandemic, as South Africa went into lockdown towards the end of March and the restrictions imposed in the UK [while earlier] were not as harsh,” she said.
“Nevertheless, collection rates and inquiries into space have been very strong in the months that followed. While still too early to accurately predict what the global fallout from the virus will be in terms of demand for space, the self-storage industry thrives on change, and it is certainly anticipated that there will be much of that in the coming months and years,” she added.
“Given the company’s low LTV, the balance sheet is in a strong position to take advantage of opportunities that may present themselves,” she added. “The declaration of a final dividend is encouraging, and while no guidance has been given for the 2021 financial year, we anticipate Stor-Age will continue to generate strong income from its portfolio going forward.”