Thursday saw self-storage property fund Stor-Age announce the acquisition of a portfolio of four more properties in the UK that will largely be funded through its successful R575 million capital raise on the JSE.
The rights issue, which was also announced and finalised on Thursday, was significantly oversubscribed. Stor-Age had initially targeted an accelerated bookbuild of R550 million.
According to the group, the new equity was raised at a price of R14.30 per share, representing a 0.92% discount to the 30-day volume weighted average traded price of its share.
“The capital raised will support the finalisation of the UK acquisition, while also enabling the group to continue taking advantage of development and acquisition opportunities in both South Africa and the UK,” it said in a statement.
“The acquisition, secured at £37.5 million and consisting of a four-property portfolio offering 12 400m² of gross lettable area [GLA], has the potential to be expanded to approximately 18 900m² on a fully fitted-out basis.”
In its Sens announcement, the group said it “believes that the proposed acquisition represents an excellent opportunity to acquire a high-quality self-storage property portfolio in locations which complement the existing UK-based Storage King portfolio”.
Stor-Age CEO Gavin Lucas said the result of the accelerated bookbuild “is a strong vote of confidence in the business and its strategy”.
“We are pleased with the result … which once again demonstrates both the high regard in which Stor-Age is held and the significant appetite for the company’s stock.”
According to the property fund, its South African pipeline consists of 10 properties, offering an estimated 59 200m² GLA at an approximate total cost of R850 million. In the UK, the pipeline consists of four properties offering an estimated 20 500m² GLA at an approximate total cost of £46 million.
The fund, SA’s largest and only JSE-listed self-storage-focused property counter, said it continues to demonstrate resilience, despite tough trading conditions and the continued impact of the Covid-19 pandemic.
In the quarter ending December 31, 2021, the total occupancy in its same store portfolio increased by 10 500m² (2.6%) while the closing average rental rate increased by 1.6% (annualised 6.3%) and 1.5% (annualised 6%) in SA and the UK respectively.
During the period, it completed the acquisition of Silver Park Self Storage (Cape Town northern suburbs) and Green Cube Self Storage (Cape Town southern suburbs).
It also announced, in September 2021, a joint venture with Nedbank Property Partners to develop two high profile properties in Morningside and Bryanston at a cost of approximately R200 million.
“Stor-Age and the self-storage business model have a track record of resilience in constrained economic environments. The primary drivers of demand for our product are life-changing events and/or dislocation, be they positive or negative in nature,” Lucas said.
“Maintaining a strategically well-placed and conservative balance sheet remains a priority for the company. Our LTV [loan-to-ratio] target range of 25% to 35% allows for the consistent execution of the strategy in both South Africa and the UK.”
The group currently has a self-storage investment property portfolio valued at more than R7.5 billion.
Palesa Mofokeng is a Moneyweb intern.