South Africa’s leading and largest self-storage property fund, Stor-Age, has announced a joint venture (JV) with Nedbank Corporate and Investment Bank to develop two high profile properties in Morningside (7 400m2 GLA) and Bryanston (4 700m2 GLA) at a total cost of approximately R200 million, subject to the finalisation of a formal contract.
Dominated by high profile, big box properties, Stor-Age boasts a significant development pipeline of eight properties with an estimated 46 500m2 GLA at a total development cost of approximately R685 million which represents approximately 12.5% of its total South African portfolio GLA as reported at the end of March 2021.
Equity ownership will be in the ratio of 50.1:49.9 (Stor-Age: Nedbank) with the JV to be funded by equity and mezzanine funding from both parties of 35% and senior debt of 65% of the total development costs. While all newly developed properties will be branded and managed by Stor-Age, the REIT will earn development and property management fees and it will have the pre-emptive right to acquire all newly developed assets once predefined operating criteria has been met.
The construction of the two properties is scheduled to start during the second half of FY2022 and both assets will form part of Stor-Age’s existing development pipeline.
Voluntary business update for the five-month period to 31 August 2021
The company reported a 7.1% increase in its South African average rental rate year-on-year (and on a same store like-for-like basis), with an increase in total occupancy of 3.0% (9 200m2).
In the UK, on a same store like-for-like basis, the average rental rate increased by 5.7% year-on-year while total occupancy has increased by 10.4% (9 800m2).
It also announced the acquisition of two trading self-storage properties in Cape Town’s northern and southern suburbs:
Servicing the broader Brackenfell and Kraaifontein areas as well as Morgenster, Silver Park Self-Storage was purchased for R60.1 million and the purpose-built double storey property offers 7 680m2 GLA on a c.12 000m2 erf. The due diligence has been completed and transfer is expected to take place during the last quarter of 2021.
Servicing the broader Ottery, Plumbstead, and Wynberg areas, ‘Property 2’ was purchased for R48 million, offering 5 470m2 of GLA on a c.6 500m2 erf. The due diligence process is currently underway and nearing completion.
Storage King debt restructure
To broaden its debt funding sources to support the growth of Storage King in the UK, a refinance process was initiated with UK lenders and is nearing completion. Once finalised, the full terms of the new club lend facility and institutional loan will be disclosed.
Update on the civil unrest impact on Stor-Age Waterfall
Approximately 60% of Stor-Age Waterfall’s total 15 100m2 GLA suffered significant structural damage and it requires full demolition and rebuilding. An insurance claim for damages to the value of R83 million plus VAT has been lodged with SASRIA.
The property had a carrying value at 31 March 2021 of R137.5 million, representing 1.8% of the total group investment property value of R7.57 billion.