National Storage Reit · ASX:NSR
National Storage Reit — Morgan Stanley Sixteenth Annual Asia Pacific Summit 2017
38 slides from National Storage Reit's conference presentation, Nov 16, 2017
Slide 1: National Storage REIT - Morgan Stanley Asia Pacific Summit
NATIONAL STORAGE REIT MORGAN STANLEY SIXTEENTH ANNUAL ASIA PACIFIC SUMMIT NOVEMBER 2017 NSR November 2017 1
Slide 2: Disclaimer
DISCLAIMER This presentation has been prepared by National Storage REIT (“NSR”) comprising National Storage Holdings Forward-looking statements Limited (ACN 166 572 845) and National Storage Financial Services Limited (ACN 600 787 246 and AFSL 475 This presentation may contain certain "forward-looki
Slide 3: Overview
OVERVIEW • Australasia’s largest self-storage owner-operator • 119 centres across Australia and New Zealand • Strong pipeline of acquisition and development opportunities • Driving organic storage growth NSR November 2017 3
Slide 4: FY17 Highlights FY18 Outlook
FY17 HIGHLIGHTS FY18 OUTLOOK IFRS PROFIT $103.4 MILLION UNDERLYING EARNINGS1 UNDERLYING EPS GUIDANCE2 9.2 CENTS $45.7 9.6 – 10.1 CENTS PER STAPLED SECURITY MILLION PER STAPLED SECURITY Underlying EPS 1 Underlying Earnings Per Security Delivered 5.7% growth in underlying earnings per stapled security
Slide 5: Market Position & Opportunities
MARKET POSITION & OPPORTUNITIES STORAGE OWNERS BY NUMBER OF CENTRES 120 100 As the largest owner-operator in the Australasian 80 self-storage industry, NSR is in a unique position to 60 continue to capitalise on a highly fragmented 40 market, with over 60 executed acquisitions since 20 NSR IPO. on l
Slide 6: Acquisitions Update
ACQUISITIONS UPDATE Acquisition Pipeline Remains Strong: • Approximately $30 million in acquisitions expected to settle prior to 31 December 2017 • Currently assessing additional $60 million • Actively investigating quality state based portfolio acquisitions • Targeting $100 million acquisitions for
Slide 7: Strategy
STRATEGY ASSET ACQUISITIONS PORTFOLIO & PRODUCT & CAPITAL MANAGEMENT DEVELOPMENT INNOVATION MANAGEMENT MANAGEMENT Focus on Executing high quality Expansion projects and Embracing digital Efficiency and organic growth, acquisitions across developments in transformation and effectiveness in capital pl
Slide 8: Profit & Loss
PROFIT & LOSS for the year ended 30 June 2017 $ Million FY17 FY16 % Change Strategy continues to deliver strong income growth: Storage revenue 105.8 70.6 50% • Storage revenue up 50% Sales of goods and services 5.6 3.1 81% • June 16 – June 17 REVPAM up 5.2%, Other revenue 4.8 4.1 17% Total Revenue 1
Slide 9: Summary Balance Sheet
SUMMARY BALANCE SHEET as at 30 June 2017 NTA growth and valuation uplift: $ Million 30 June 17 30 June 16 % Change • NTA increased by 18% to $1.34 per stapled security at 30 June 2017 Cash 23.2 13.4 73% • Investment properties held increased by 75% from Investment Properties 1,162.5 665.9 75% (net o
Slide 10: Capital Management
CAPITAL MANAGEMENT Gearing reduced and tenor extended: Capital Management Jun 17 Jun 16 • June 2017 gearing of 37%, down from 38% at June 2016 Total debt facilities $546m $424m • Target range 25% - 40% (Covenant 55%) Total debt drawn $485m $286m • ICR 4.2x (Covenant 2x) Remaining debt capacity $61m
Slide 11: Key Operational Metrics - REVPAM
KEY OPERATIONAL METRICS STRONG REVPAM GROWTH >5% REVPAM REVPAM $/sqm June 16 Centres including Southern Cross 215 215 213 212 211 210 209 205 207 207 200 205 203 202 202 195 201 190 199 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 197 REVPAM 6 Mth Averag
Slide 12: Key Operational Metrics - Occupancy
KEY OPERATIONAL METRICS OCCUPANCY CONTINUES TO BUILD 84.0% 82.0% 80.0% 78.0% 76.0% 74.0% 72.0% 70.0% 68.0% 66.0% 64.0% Original Portfolio FY15 Acq FY16 Acq Southern Cross Total Portfolio Occupancy growth from 3.6% 75% 1.9% 80.1% 1.8% 81.5% 2.4% 78.8% 2.1% 77.5% FY16 to FY17 Occupancy growth from 4.4
Slide 13: Key Operational Metrics - EBITDA
KEY OPERATIONAL METRICS INCREASED EBITDA GROWTH Original Portfolio FY15 Acq Total Portfolio 24 13 70 85.5% 4.8% 6.4% 24 13 60 24 23 12 50 23 12 40 52.6% $,m $,m $,m 23 23 0.2% 12 30 23 12 20 22 12 10 22 22 11 0 FY15 FY16 FY17 FY16 FY17 FY15 FY16 FY17 EBITDA growth 4.8% 6.4% 85.5% from FY16 to FY17 I
Slide 14: Organic Growth Opportunity
ORGANIC GROWTH OPPORTUNITY Upside Potential From Occupancy Growth: Expansion Growth Opportunity: • Significant upside value in existing assets • Expansion opportunity identified in up to 25 existing centres • Benefit of “above average” size centres • Planning underway for first 5 expansions • Occupa
Slide 15: New Zealand
NEW ZEALAND CONTINUED GROWTH • Eleven centres across New Zealand with 59,000 sqm of NLA • Acquisitions: • Kenepuru - January 2017 • Gardens and Kaikorai (Dunedin) – March 2017 • Economies of scale being achieved as portfolio continues to grow • New Zealand operational structure in place with direct
Slide 16: Development and Portfolio Management
National Storage Albion delivered via APSF partnership, opened March DEVELOPMENT AND 2017 PORTFOLIO MANAGEMENT GENERATING INCOME AND OPPORTUNITY WITH OUR PARTNERS National Storage Carrara delivered via APSF partnership, opened NSR continues to work with its investment partners on September 2016 the
Slide 17: Development and Portfolio Management
DEVELOPMENT AND PORTFOLIO MANAGEMENT ADDING VALUE THROUGH EXPANSION OF EXISTING ASSETS National Storage Kurnell marked NSR has identified up to 25 centres within its existing for further expansion and portfolio with potential for further value add via additional marine storage expansion and developm
Slide 18: Sustainability
SUSTAINABILITY PROACTIVELY DELIVERING ENVIRONMENTAL AND FINANCIAL BENEFITS National Storage has completed an economic and feasibility study into the potential for installation of a solar photovoltaic network across the portfolio. The comprehensive program is designed to deliver long term benefits bo
Slide 19: Medium Term Earnings Drivers
MEDIUM TERM EARNINGS DRIVERS DELIVERING EARNINGS GROWTH FROM MULTIPLE REVENUE STREAMS I ND I CAT I V E D R I V E R S AND AS S U M P T I O NS G R O W T H R AT E • Balance occupancy and rate to drive overall REVPAM growth ORGANIC GROWTH • Advancements in revenue 4% - 6% management and data analytics •
Slide 20: FY18 Guidance and Outlook
FY18 GUIDANCE AND OUTLOOK 9.6 cents to 10.1 cents $49.5 million to $52.0 million 4.4% 9.8% Growth over FY17 8.3% 13.8% PER STAPLED SECURITY Underlying EPS Underlying Earnings FY17 Less one Same FY17 FY18 Ops Mgmt Additional Reduced Other FY18 underlying off items centre Acquisitions Acquisitions and
Slide 21: Thank You / Appendices
THANK YOU APPENDICES NSR November 2017 21
Slide 22: Appendices
APPENDICES NSR FOOTPRINT ACQUISITION PERFORMANCE ACQUISITION INTEGRATION ACQUISITION CASE STUDIES KEY FINANCIAL AND PORTFOLIO METRICS THE NSR ADVANTAGE OPERATIONAL METRICS ACQUISITION DYNAMICS ACQUISITION SNAPSHOT DEVELOPMENT SNAPSHOT EXPANSION SNAPSHOT PORTFOLIO METRICS STRATEGY DETAIL MARKET DYNAM
Slide 23: NSR Footprint
NSR FOOTPRINT NSR November 2017 23
Slide 24: Acquisition Performance
ACQUISITION PERFORMANCE FY1 7 AC Q U I SI TI O NS I PO – J U NE 1 5 AC Q U I S I TI O N PE R F O R M AN C E CENTRE STATE DATE NLA (SQM) PURCHASE Acquisition Yields PRICE Butler Western August 2016 5,100 $8.8 million 14.0% Australia Kurnell New South August 2016 12,400 $17.5 million 12.0% Wales Moona
Slide 25: Acquisition Integration
ACQUISITION INTEGRATION RESULTS TAKE TIME Staffing and Systems Branding Training and Operations Integration Signage and Development Management and Security Marketing IMPACTING FACTORS • Brand and Market Position– whether the acquisition is part of a well known national or regional brand versus an in
Slide 26: Acquisition Case Studies
ACQUISITION CASE STUDIES Gl e n I r i s S o u th M e l b o u r n e • Acquired February 2015 • Acquired February 2015 • Strong occupancy and rate growth • Strong rate growth • Positive valuation uplift • Positive valuation uplift Change Change On Acq June 17 On Acq June 17 % % Occupancy 86% 92% 6.1%
Slide 27: Key Financial and Portfolio Metrics
KEY FINANCIAL AND PORTFOLIO METRICS Group FY16 FY17 Change Total Revenue $79.8m $117.5m 47% IFRS profit after tax $44.0m $103.4m 135% Earnings per stapled security 13.06cps 20.74cps 59% Underlying earnings(1) $29.2m $45.7m 57% Underlying earnings per stapled security (1) 8.7cps 9.2cps 5.7% Net opera
Slide 28: The NSR Advantage
THE NSR ADVANTAGE DRIVING EFFICIENCY ACROSS A SCALABLE OPERATING BUSINESS Operations • Operational management structure refined for scalability • Focus on call centre performance • Continuing evolution of revenue management system and data analytics Marketing • Driving brand and product awareness •
Slide 29: Operational Metrics
OPERATIONAL METRICS ACHIEVING AN OPTIMAL BALANCE BETWEEN OCCUPANCY AND RATE PER SQM O R O R O R Occupancy Focus BALANCE Rate Focus Driving occupancy at the Driving REVPAM growth Driving rate per sqm expense of rate per sqm across the portfolio at the expense of characterised by heavily characterised
Slide 30: Acquisition Dynamics
ACQUISITION DYNAMICS Market Conditions Key Features Prevailing market conditions including housing market trends and NSR seeks acquisition opportunities that feature: turnover, affordability, socio-demographics and local economic • Prominent location and high level of visibility to passing traffic f
Slide 31: Acquisition Snapshot
ACQUISITION SNAPSHOT CONTRIBUTING FROM DAY ONE • Target day one accretive acquisitions • Preference for assets that will also provide synergies • Indicative acquisition: • Value $8m - $15m • Size 4,500sqm – 6,000sqm • Occupancy 70% - 85% • Passing yield 6.5% - 8.5% • Yield on cost at stabilisation 9
Slide 32: Development Snapshot
DEVELOPMENT SNAPSHOT LONG TERM GROWTH • Greenfield development • Purpose built to NSR design and standards • Currently undertaken in joint venture structures • Decretive in initial years • Provides acquisition opportunities 3 – 5 years from commencement of operation • Day one income through provisio
Slide 33: Expansion Snapshot
EXPANSION SNAPSHOT MAXIMISING PORTFOLIO VALUE • Expansion of existing asset where occupancy 85%+ and opportunity to add additional NLA • Majority of existing cashflow retained during expansion phase • Marginally decretive in year one • Fill up risk / time to achieve sustainable occupancy is minimise
Slide 34: Portfolio Metrics
PORTFOLIO METRICS 30 June 2016 30 June 2017 AUST NZ MGT TOTAL AUST NZ MGT TOTAL Freehold centres 52 8 28 88 87 11 3 101 Leasehold centres 16 - 1 17 15 - - 15 Total centres 68 8 29 105 102 11 3 116 Freehold NLA (sqm) 288,000 31,000 142,000 461,000 474,000 59,000 17,000 550,000 Leasehold NLA (sqm) 78,
Slide 35: Strategy Detail
STRATEGY DETAIL DEVELOPING MULTIPLE REVENUE STREAMS TO MAXIMISE RETURNS Asset Management • Achieve organic growth through proactive management of rate and occupancy to drive overall REVPAM growth • Leverage management platform and economies of scale to extract value • Drive cost efficiencies across
Slide 36: Market Dynamics
MARKET DYNAMICS SELF-STORAGE IN OTHER ESTABLISHED MARKETS US self-storage REITs outperformed every other real Markets in Asia Pacific remain underserviced estate sector over the past twenty years. compared to the USA. US REITs Equity by Sectors NLA Average Home (CAGR from Dec 93 to Jun 17) per capit
Slide 37: Drivers of Self-Storage
DRIVERS OF SELF-STORAGE A GROWING INDUSTRY DEMOGRAPHIC SOCIOECONOMIC HOUSING MARKETS BUSINESS MARKETS • Marriage / Moving in • Urbanisation • Housing Construction • Growth in online retailing together • Ageing population Approvals • Optimising existing • Divorce • Downsizing • Renovations office/war
Slide 38: Thank You
THANK YOU 1800 683 290 WWW.NATIONALSTORAGE.COM.AU INVEST@NATIONALSTORAGE.COM.AU NSR November 2017 38
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