Stor-age Property Reit Ltd. · JSE:SSS
Stor-age Property Reit — H1 FY2024 Earnings Presentation
76 slides from Stor-age Property Reit's earnings presentation, November 2023
Slide 1: FY24 Interim Results Presentation
STOR-AGE PROPERTY REIT FY24 INTERIM RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023 STOR-AGE PROPERTY REIT LIMITED 1
Slide 2: Presentation Outline
PRESENTATION OUTLINE Page Introduction 4 Financial review 7 Joint venture partnerships 20 Acquisitions and developments 25 Third-party management 29 Environmental, social and governance 31 Outlook 34 STOR-AGE PROPERTY REIT LIMITED 2
Slide 3: Annexures
ANNEXURES Page A: Key financial and operational highlights 36 B: Share price performance 38 C: Investment case 40 D: The market 41 E: Strategy and portfolio 46 F: SA property 51 G: UK property 58 H: Operations 64 I: Environmental, social and governance 72 STOR-AGE PROPERTY REIT LIMITED 3
Slide 4: Introduction
INTRODUCTION STOR-AGE PROPERTY REIT LIMITED 4
Slide 5: Highlights
HIGHLIGHTS Interim dividend per share up 2.2% to 61.36 cents Total return of 13.5%¹ Rental income and net property operating income up 17.0% and 15.7% respectively Same-store rental income up 17.7% (SA 13.6%; UK 3.1%) Same-store achieved average rental rate up 9.6% SA and 5.1% UK Occupancy up 9 300m
Slide 6: Snapshot
SNAPSHOT Listing date November 2015 JSE sector Speciality REITs Profile Highly specialised, low risk, income paying self storage REIT Self storage 12 publicly traded self storage REITs universe (US: 7, UK: 2, EU: 1, Aus: 1, SA: 1) Market R5.7 billion1 capitalisation Total South Africa United Kingdom
Slide 7: Financial Review
FINANCIAL REVIEW STOR-AGE PROPERTY REIT LIMITED 7
Slide 8: Trading Results SA
TRADING RESULTS SA 30 Sep 2023 30 Sep 2022 Non same- Non same- % change Same-store store Total Same-store store Total Rm Rm Rm Rm Rm Rm Same-store Total Rental income Self storage 276.2 2.7 278.9 243.2 - 243.2 13.6% 14.7% Other 4.9 0.3 5.2 4.3 - 4.3 13.0% 19.0% Ancillary income 12.3 0.1 12.4 11.2 -
Slide 9: Trading Results UK
TRADING RESULTS UK 30 Sep 2023 30 Sep 2022 Non same- Non same- Same-store store Total Same-store store Total % change £’000 £’000 £’000 £’000 £’000 £’000 Same-store Rental income Self storage 11 036 - 11 036 10 702 - 10 702 3.1% Other 438 - 438 481 - 481 (8.9)% Ancillary income 1246 - 1246 1264 - 12
Slide 10: Occupancy Summary
OCCUPANCY SUMMARY 30 Sep 2023 30 Sep 2022 OWNED PORTFOLIO GLA m2 Occupied m2 % Occupied GLA m2 Occupied m2 % Occupied SA Same-store 384 000 348 200 90.7% 384 300 338 300 88.0% Non same-store 3 800 3 100 82.0% - - - Total SA 387 800 351 300 90.6% 384 300 338 300 88.0% UK Same-store 109 400 91 800 83.
Slide 11: Portfolio Analysis and Customer Profile
PORTFOLIO ANALYSIS AND CUSTOMER PROFILE Portfolio analysis (number of properties) SA UK Total Freehold 51 18 69 Leasehold 3 8 11 Total – own properties 54 26 80 Managed properties 6 11 17 Total – trading properties 60 37 97 Under development 2 3 5 Total – including properties under development 62 40
Slide 12: Management Fees
MANAGEMENT FEES 30 Sep 2023 30 Sep 2022 Rm Rm Recurring fees Property management fees 19.2 5.9 Digital First 5.4 2.3 Total – recurring fees 24.6 8.2 Non – recurring fees JV development fees – SA 4.5 2.2 JV development fees – UK 7.4 3.5 JV acquisition fees – SA - 1.5 JV acquisition fees – UK 2.3 2.0
Slide 13: Distribution Analysis
DISTRIBUTION ANALYSIS 30 Sep 2023 30 Sep 2022 Increase/ SA UK UK Total Total (decrease) +/- Rm £m Rm Rm Rm Rm Net property operating income 226.0 8.9 209.9 435.9 371.0 64.9 +17.5% Waterfall – loss of revenue claim 5.3 - - 5.3 5.3 - -% Rental guarantee and underpin - - - - 3.5 (3.5) - 100% Management
Slide 14: Balance Sheet – Summarised
BALANCE SHEET – SUMMARISED R million 30 Sep 31 Mar 30 Sep 31 Mar 2023 2023 2023 2023 ASSETS LIABILITIES Non-current assets Non-current liabilities Investment properties 10 872 10 398 Bank debt 3 507 3 390 ZAR 1 195 1 188 SA Freehold 5 149 4 994 GBP 2 312 2 202 SA Leasehold 164 174 Derivatives mark-t
Slide 15: Property Valuations
PROPERTY VALUATIONS VALUATION BREAKDOWN Average value Rm % of portfolio Discount rate Exit cap rate per m² SA Freehold and long leasehold 5 148.5 96.9% Short leasehold 164.3 3.1% Total 5 312.8 100.0% 13 149 14.22% 8.51% Trading properties 5 194.8 97.8% Average value per m2 up 2.3% vs Mar 23 Under co
Slide 16: Net Asset Value per Share
NET ASSET VALUE PER SHARE Rm 30 Sep 2023 31 Mar 2023 Net asset value (NAV) excluding NCI 7 351.0 7 136.2 Less: Goodwill and intangible assets (159.2) (156.0) Tangible net asset value (TNAV) 7 191.8 6 980.2 Deferred tax relating to UK investment property revaluations 384.2 369.1 Adjusted TNAV 7 576.0
Slide 17: Capital Structure
CAPITAL STRUCTURE ZAR facilities GBP facilities GBP facilities Total facilities Rm £m Rm Rm Total debt facilities 1 872.0 115.0 2 655.9 4 527.9 Undrawn debt facilities 454.7 10.5 242.0 696.8 Gross debt 1 417.3 104.5 2 413.8 3 831.1 Gross debt net of cash held in debt facilities 1 362.3 104.5 2 413.8
Slide 18: Currency Hedging
CURRENCY HEDGING HEDGING OF NET INVESTMENT IN STORAGE KING £ million 30 Sep 2023 30 Mar 2023 30 Sep 2022 Investment property 253.9 250.7 246.6 Leasehold liabilities (13.3) (13.0) (13.5) Net investment property 240.6 237.7 233.1 Bank debt (104.5) (101.5) (85.9) Cash 1.8 4.1 2.8 Other assets 9.7 10.2
Slide 19: UK REIT Adoption – Storage King
UK REIT ADOPTION – STORAGE KING • Stor-Age board elected to classify the Storage King group of companies as a UK REIT – effective November 2023 UK REIT • A group of companies can be treated as a UK REIT if the holding company meets certain conditions and the adoption group as a whole meets certain o
Slide 20: Joint Venture Partnerships
JOINT VENTURE PARTNERSHIPS STOR-AGE PROPERTY REIT LIMITED 20
Slide 21: Joint Ventures – The Model
JOINT VENTURES – THE MODEL Over the past three years, several JV partnerships to acquire and develop new properties have been established in SA and the UK. Overview • The JV model allows us to achieve growth and scale in both markets while providing an attractive return on invested capital • Leverag
Slide 22: Joint Ventures – South Africa
JOINT VENTURES – SOUTH AFRICA • Entered JV with Nedbank Corporate and Investment Bank, acting through Nedbank Property Partners – FY22 • Portfolio comprises four new developments completed in FY24 • Total GLA – 24 100m² on full fit-out Nedbank Property Partners • Estimated development cost on full c
Slide 23: Joint Ventures – UK
JOINT VENTURES – UK • Established in 2021 to assemble a portfolio of high-quality self storage properties with a focus on London (and its commuter towns), the South East and key regional towns and cities • Stor-Age equity interest – 24.9% • Total JV commitments to acquisitions and new developments o
Slide 24: Joint Ventures – Portfolio Summary
JOINT VENTURES – PORTFOLIO SUMMARY The table below summarises the JV property portfolio: New New Acquired GLA on full developments developments Pipeline Total Trading fit-out (m²) Trading In progress SA NPP 4 1 - - 5 29 500 Garden Cities 1 - - - 1 6 300 Rabie - 1 - - 1 6 100 Total 5 2 - - 7 41 900 U
Slide 25: Acquisitions and Developments
ACQUISITIONS AND DEVELOPMENTS STOR-AGE PROPERTY REIT LIMITED 25
Slide 26: Acquisitions and Developments
ACQUISITIONS AND DEVELOPMENTS Overview • Our growth strategy focuses on organic growth through the expansion of existing stores, acquisitions and development opportunities • We benefit from in-house development expertise and remain disciplined, but opportunistic, to ensure that our risk-adjusted yie
Slide 27: New Developments
NEW DEVELOPMENTS Project Completion Property Region Country Status GLA Cost date Century City Cape Town SA Under construction – Rabie JV R96m 6 100m² Q2 FY25 Kramerville Johannesburg SA Under construction – Nedbank JV R75m 5 400m² Q2 FY25 De Waterkant Cape Town SA In planning TBC 6 600m² TBC Sandton
Slide 28: Extensions and Redevelopments
EXTENSIONS AND REDEVELOPMENTS Project Completion Property Region Country Status GLA Cost date Cresta Johannesburg SA Fit-out of additional GLA – in progress R2.0m 2 100m² Q3 FY24 Bellville – Durban Rd Cape Town SA Fit-out of additional GLA – in progress R2.0m 1 900m² Q3 FY24 Parklands Cape Town SA E
Slide 29: Third-Party Management
THIRD-PARTY MANAGEMENT STOR-AGE PROPERTY REIT LIMITED 29
Slide 30: Third-Party Management
THIRD-PARTY MANAGEMENT Overview • Third-party management allows us to generate additional revenue with minimal capital investment by leveraging our existing superior infrastructure and skills, and forms an integral part of our growth strategy • In the UK, we provide this through our Management 1st o
Slide 31: Environmental, Social and Governance
ENVIRONMENTAL, SOCIAL AND GOVERNANCE STOR-AGE PROPERTY REIT LIMITED 31
Slide 32: ESG
ESG Strategy and framework • Aligns our Vision and Core Values with relevant UN Sustainable Development Goals (SDGs) and takes guidance from the Task Force on Climate-related Financial Disclosures (TCFD) • ESG framework – enables monitoring of our impact on the economy, the workplace, the social env
Slide 33: Typical Property
TYPICAL PROPERTY Stor-Age develops environmentally-friendly buildings with low environmental impact. ESG and sustainability remain a key focus across each of our properties. Solar PV systems Properties with solar capacity – 48 Solar power generated to date – 4.8 million kWh Motion-sensitive LED ligh
Slide 34: Outlook
OUTLOOK • Successfully navigated challenges of evolving operating environment in H1 FY24 • Continue to enhance every facet of our operations platform in pursuit of growth • Delivered a robust operational performance, with growth in revenue, earnings and cash flow • Macro environment remains uncertai
Slide 35: Annexures
ANNEXURES A. Key financial and operational highlights B. Share price performance F. SA property G. UK property C. Investment case H. Operations D. The market I. Environmental, social and governance E. Strategy and portfolio STOR-AGE STOR-AGE PROPERTY PROPERTY REITLIMITED REIT LIMITED 35
Slide 36: Key Financial and Operational Highlights
KEY FINANCIAL AND OPERATIONAL HIGHLIGHTS Annexure A 30 September 30 September +/- +/- 2023 2022 CER1 Property operating revenue2 Group (R million) 591.9 502.2 17.9% 8.1% SA (R million) 294.2 256.7 14.6% UK (£ ‘000) 12 674 12 393 2.3% Net property operating income (NPO)3 Group (R million) 435.9 371.0
Slide 37: Key Financial and Operational Highlights (continued)
KEY FINANCIAL AND OPERATIONAL HIGHLIGHTS (CONTINUED) Annexure A 30 September 30 September +/- 2023 2022 Number of properties – owned portfolio 80 79 1 Number of properties – owned and managed 97 92 5 2 Closing occupancy m – owned portfolio Group 443 100 433 800 2.1% SA 351 300 338 300 3.8% UK 91 800
Slide 38: Share Price Performance – Relative to SAPY
SHARE PRICE PERFORMANCE – RELATIVE TO SAPY Annexure B Significant outperformance of the listed property index and SA REITs since listing in 2015 Multi-year performance1: Positive divergence relative to SAPY, outperforming by c.179% 170 45 40 150 Number of shares (Millions) 35 130 30 Indexed price 12
Slide 39: Share Price Performance – Relative to UK Peers
SHARE PRICE PERFORMANCE – RELATIVE TO UK PEERS Annexure B Share price performance in GBP since listing in 2015 Stor-Age has a 50% + exposure to GBP assets through Storage King Stor-Age is entrenched in the UK market. This geographic underpin is coupled with an attractive yield spread relative to UK
Slide 40: Investment Case
INVESTMENT CASE Annexure C • Niche growth sector globally, driven by societal trends › Consumerism, including the increase in e-commerce Resilient sector with › Densification and an increasingly mobile population growth opportunities globally • Primary drivers of demand are life-changing events and
Slide 41: The Market
THE MARKET STOR-AGE PROPERTY REIT LIMITED 41
Slide 42: The Market
THE MARKET Annexure D • UK self storage market¹ less developed than the United States and Australia • Supply of space is estimated to be 0.82 sqf per head of population in the UK, compared to 9.4 sqf in the US, 2.1 sqf in Australia and 0.25 sqf in mainland Europe 2 050 83.3% 3 375 • Market remains f
Slide 43: The Market (continued)
THE MARKET (continued) Annexure D • Market sentiment and investor interest in the UK self storage sector remains positive with its strong inflation linked characteristics and a structural undersupply in the market¹ › During times of economic uncertainty, the self storage sector has demonstrated bett
Slide 44: UK and European Self Storage Industry – Overview
Annexure D UK AND EUROPEAN SELF STORAGE INDUSTRY – OVERVIEW UK self storage industry¹ European self storage industry (excluding UK)³ 2 231 83.3% 4 649 Self storage properties, Occupancy on current Self storage properties³ includes 739 container lettable area operators 91.1 million sqf Population⁴ 84
Slide 45: UK Self Storage Industry – Rate and Occupancy
UK SELF STORAGE INDUSTRY – RATE AND OCCUPANCY Annexure D Source: The Self Storage Association UK annual industry report, May 2023 STOR-AGE PROPERTY REIT LIMITED 45
Slide 46: Strategy and Portfolio
STRATEGY AND PORTFOLIO STOR-AGE PROPERTY REIT LIMITED 46
Slide 47: Strategy
STRATEGY Annexure E Strategic planning to 2025 • Highly strategic in planning – completed in 5-year cycles • Successful track record of executing 5-year strategies to 2015 and 2020 • Business strategy traditionally led by property strategy – now complemented by digital strategy • Multiple research p
Slide 48: Strategy (continued)
STRATEGY (continued) Annexure E Stor-Age is a sector specialist with deep product understanding, significant emerging and first-world market experience, and boasting a successful track-record of managing self storage assets. The business benefits from outstanding real estate expertise, an excellent
Slide 49: Portfolio Overview
PORTFOLIO OVERVIEW Annexure E 97 The portfolio comprises 60 properties in SA and 37 properties in the UK SA PORTFOLIO UK PORTFOLIO² 60¹ properties 37¹ properties R5.6bn³ R6.5 bn³ (£279 million) 403 700m² GLA⁴ 163 300m² GLA⁴ 30 200 tenants⁴ 19 400 tenants⁴ 60 37 1. 30 September 2023 2. An additional
Slide 50: Portfolio Analysis
PORTFOLIO ANALYSIS Annexure E Total property value¹ Total number of tenants² Total GLA² Total number of properties³ R12.03bn 49 600 567 000m2 97 Value of properties Number of tenants GLA Number of properties 39% 29% 38% 46% 54% 61% 71% 62% South Africa UK 1. Total net investment property value, incl
Slide 51: SA Property
SA PROPERTY STOR-AGE PROPERTY REIT LIMITED 51
Slide 52: Century City – Current Development
CENTURY CITY – CURRENT DEVELOPMENT Annexure F Located prominently on Edison Way just off Bosmansdam Road in Century City, the Montague property enjoys high visibility to passing traffic with good access. Gardens Edgemead The property will comprise an estimated 6 100m² GLA on completion (on full fit-
Slide 53: Kramerville – Current Development
KRAMERVILLE – CURRENT DEVELOPMENT Annexure F Sandton South Road Located in Kramerville (Sandown), the property is situated on the corner of Dartfield Road and Commerce Crescent. The property benefits from having access on grade to all levels and will comprise an Dartfield Bowling Road estimated 5 40
Slide 54: Bryanston – Completed Development
BRYANSTON – COMPLETED DEVELOPMENT Annexure F William Main Road With a prominent location alongside the Virgin Active at Grosvenor Crossing, the Nicol Drive property is positioned at the intersection of William Nicol Drive and Main Road in Bryanston. The property enjoys high visibility to passing tra
Slide 55: Pinelands – Completed Development
PINELANDS – COMPLETED DEVELOPMENT Annexure F Located in Pinelands, the property is situated on the corner of Howard Drive and Howard Centre Gardener Way, opposite Howard Centre. The property will comprise an estimated 7 300m² GLA on full fit-out and has been Forest Drive developed in the Nedbank JV.
Slide 56: Paarden Eiland – Completed Development
PAARDEN EILAND – COMPLETED DEVELOPMENT Annexure F Located prominently in the service road to Marine Drive, the property enjoys high exposure to the busy Marine Drive which carries significant traffic volume in both Milnerton directions. Marine Drive The property will comprise an estimated 4 700m² GL
Slide 57: Load Shedding – Impact in SA
LOAD SHEDDING – IMPACT IN SA Annexure F Our properties • Are not crowded environments, have a small onsite staff complement and are typically low-intensity in their use of energy • Electricity costs ~3.5% of direct operating costs and < 1.0% of revenue Current status • Diesel spend H1 FY24 – c. R2.1
Slide 58: UK Property
UK PROPERTY STOR-AGE PROPERTY REIT LIMITED 58
Slide 59: Canterbury – Current Development
CANTERBURY – CURRENT DEVELOPMENT Annexure G Storage King Canterbury is a greenfield development located to the east of Canterbury Currys Town Centre in Kent, in close proximity to a large ‘big box’ retail corridor. M&S The site forms part of the ‘new to be created’ Canterbury Trade Park which sits a
Slide 60: Acton – Future Development
ACTON – FUTURE DEVELOPMENT Annexure G Storage King Acton is a brownfield development (building conversion) located on A2020 The Vale Stanley Gardens just off the The Vale (A4020), a busy main arterial in Acton in West Shepherds London. Acton Bush Acton, which sits in zone 3, is a large residential s
Slide 61: Leyton – Future Development
LEYTON – FUTURE DEVELOPMENT Annexure G Aldi Storage King Leyton is a brownfield development (building conversion) located on Golden Business Park, at the intersection of Orient Way and the A104, which lies 1.5 miles from Leyton and 2 miles from Walthamstow underground stations and is easily ASDA Sup
Slide 62: Heathrow – Completed Development
HEATHROW – COMPLETED DEVELOPMENT Annexure G To the M25 Storage King Heathrow is a greenfield development located to the west of London, inside the M25 Orbital Motorway (M25) and situated in close proximity to Heathrow Airport. Heathrow Airport To Central London The site is located on a prominent int
Slide 63: West Bromwich – Completed Development
WEST BROMWICH – COMPLETED DEVELOPMENT Annexure G Storage King West Bromwich is a brownfield development (building conversion) located Ford Honda alongside a busy roundabout on the Black Country New Road (A41), a busy arterial with good access to both the M5 and M6 motorways. West Bromwich town centr
Slide 64: Operations
OPERATIONS STOR-AGE PROPERTY REIT LIMITED 64
Slide 65: The Platform
THE PLATFORM Annexure H • Highly sophisticated and scalable dual-market platform – can be leveraged into new markets • Unique benefit relative to UK peers – cost effective SA head office infrastructure, homogenous product, same language and similar timeline • Vastly experienced management teams – SA
Slide 66: Platform Driven by Data
PLATFORM DRIVEN BY DATA Annexure H Optimise: • Supply/demand dynamics • Rental escalations • Unit configurations • Rental rates • Discounting Contact Centre Data Tenant Data • Quality control – ongoing call reviews Revenue • Leasing characteristics • Respond to needs Management • Length of stay • Im
Slide 67: Our Customers
OUR CUSTOMERS Annexure H GEOGRAPHIC REPRESENTATION1 RESIDENTIAL / COMMERCIAL TENANT MIX BY GLA2 Gauteng Residential 29 Western Cape 36 33 Commercial Eastern Cape 1 KwaZulu-Natal 6 Free State 67 3 United Kingdom 25 GEOGRAPHIC FOCUS RESIDENTIAL vs COMMERCIAL Primary focus = high profile locations in J
Slide 68: Our Customers (continued)
OUR CUSTOMERS (continued) Annexure H AVERAGE LENGTH OF STAY – SA1 AVERAGE LENGTH OF STAY – UK2 < 6 Months < 6 Months 23 26 31 30 6 - 12 Months 6 - 12 Months > 12 Months > 12 Months 12 18 2 - 3 Years 10 13 2 - 3 Years 21 16 > 3 Years > 3 Years DEMAND PROFILE – SA DEMAND PROFILE – UK Two significant u
Slide 69: Business Customers – Adding Value to SA Economy
Annexure H BUSINESS CUSTOMERS – ADDING VALUE TO SA ECONOMY Our commercial customers¹ 50% + 15% + 65% + 85% + 40% + SMMEs Entrepreneurs Operational Inventory Within 5kms of requirements and stock their store Contribution to the local economy¹ Considering that we had approximately 8 500 commercial ten
Slide 70: Digital First – Overview
DIGITAL FIRST – OVERVIEW Annexure H Benefits of the model • Opportunity for smaller independent operators to leverage a publicly traded self storage REIT’s digital platform – at a fraction of the cost Proven capability Deep industry to capitalise on specific audience • For Stor-Age it provides an av
Slide 71: Digital First – Digital Marketing Platform
DIGITAL FIRST – DIGITAL MARKETING PLATFORM Annexure H Key features EUROPEAN CASE STUDY¹ • Full service digital marketing agency, focused on the self storage Sustained impact on enquiry generation sector – launched in July 2020 and significant reduction in advertising • Stor-Age = accredited Google a
Slide 72: Environmental, Social and Governance
ENVIRONMENTAL, SOCIAL AND GOVERNANCE STOR-AGE PROPERTY REIT LIMITED 72
Slide 73: Annual Impact of Renewable Energy
ANNUAL IMPACT OF RENEWABLE ENERGY Annexure I • C02 emissions¹ avoided in FY23 – 2 771 tonnes (FY22 1 677 tonnes), through the consumption of on-site solar PV renewable electricity • While total power demand across the portfolio is increasing, emissions generated through municipal electricity consump
Slide 74: Social
SOCIAL Annexure I Overview • Stor-Age remains committed to our Social and Economic Development initiatives › Utilising our resources – operational, marketing and our core self storage product › To initiate and contribute to socio-economic development projects › Benefiting previously disadvantaged gr
Slide 75: Social (continued)
SOCIAL (continued) Annexure I Stor-Age Business Hub • Stor-Age remains committed to our Social and Economic Development initiatives • Actively supports the continued sustainability of our commercial customers’ businesses • Majority of whom are SMMEs and on which the SA economy is dependent on for su
Slide 76: Disclaimer and Confidentiality
DISCLAIMER AND CONFIDENTIALITY This document does not constitute or form part of any formal proposal or offer or solicitation to sell, or offer for sale or investment, or for the issue or sale of securities. This document does not (and nor does any part of it) constitute any contract, commitment or
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