Stor-Age REIT has reported an increase in its rental income and net property operating income of 14.8% and 14.4% respectively for the year ended March 2024.
Its portfolio comprises 103 trading properties across SA (60) and the UK (43), providing storage to 52 000 customers (as at 31st May 2024). The combined value of its portfolio, including assets managed in JV partnerships, was R17.3 billion (SA – R6 billion; UK – £471 million) at the end of the financial year with the maximum lettable area, including its pipeline and ongoing developments, exceeding 650 000m2.
Rental income in its same-store operations increased by 12.7% in SA and 3% in the UK with a 9.5% increase in its rental rate in SA and 4.7% in the UK. The company’s portfolio occupancy also recorded an increase, up 10 700m2 (SA – 8 700m2; UK – 2 000m2), closing at 90.2% (SA – 92.1%; UK – 83.5%).
Its net investment property value increased 8.8% to R11.3 billion with a loan-to-value (LTV) ratio of 31.4% over 85% of net debt subject to hedging.
During the year, Stor-Age proceeded with its JV structures having opened or acquired twelve properties representing 72 500m2 gross lettable area (GLA) (SA – 4; UK – 8). It entered into a third-party management agreement with Hines, one of the largest privately held real estate investors and managers globally, post yearend, to manage Stor-Age’s recently acquired three property self-storage portfolio in Kent, taking the total number of managed properties to 23 (SA – 6; UK – 17).
The company has a development pipeline of 60 000m2 GLA across thirteen projects at various stages of planning and completion.
“Over the past year we delivered exceptionally strong results in SA and although the UK presented a more challenging environment compared to the last few years, the business is well positioned from a strategic, financial, and operational perspective in both markets. We will continue to consider acquisition and development opportunities in SA albeit we remain very circumspect with capital allocation.”
“Our offshore growth is constrained by a high cost of capital and the capital-light management strategy remains the preferred option for growth in international markets. We remain confident in our business model which has proved its resilience through multiple economic crises.”
Since its listing on the JSE in 2015, Stor-Age has maintained a 100% dividend payout ratio. Given the current high cost of capital, its Board is considering lowering the payout ratio to 90% – 95% of distributable income. The Group has carried forward assessed losses of approximately R373 million (which arose in the period prior to Stor-Age’s listing) which would minimise potential tax leakage. Under the UK REIT rules, at least 90% of property rental profits must be distributed to shareholders as a dividend and we do not anticipate any material adverse tax implications in the UK from retaining any portion thereof (subject to satisfying the UK REIT rules). No final decision has yet been made by the board and we intend engaging with shareholders prior to finalising the dividend policy for FY2025.
The REIT declared a dividend of 56.81 cents per share for FY2024.
