Stor-age Property Reit Ltd. · JSE:SSS
Stor-age Property Reit — FY2023 Earnings Presentation
68 slides from Stor-age Property Reit's earnings presentation, March 2023
Slide 1: Annual Results Presentation
STOR-AGE PROPERTY REIT ANNUAL RESULTS PRESENTATION YEAR ENDED 31 MARCH 2023 STOR-AGE PROPERTY REIT LIMITED 1
Slide 2: Presentation Outline
PRESENTATION OUTLINE Page Introduction 4 Financial review 11 Property review 26 Environmental, social and governance 34 Operations review 40 Outlook 45 STOR-AGE PROPERTY REIT LIMITED 2
Slide 3: Annexures
ANNEXURES Page A: Investment case 47 B: Strategy 48 C: Portfolio overview 50 D: Portfolio analysis 51 E: SA developments 51 F: UK developments 57 G: The platform 61 H: Our customers 62 I: Digital First – overview 65 J: UK and European self storage industry – overview 66 STOR-AGE PROPERTY REIT LIMITE
Slide 4: Introduction
INTRODUCTION STOR-AGE PROPERTY REIT LIMITED 4
Slide 5: Highlights
HIGHLIGHTS Full year dividend 118.14 cents per share – up 5.6% y-o-y Total return of 16.9%¹ Rental income and net property operating income up 17.3% and 15.3% respectively Same-store rental income up 9.8% (SA 9.8%; UK 8.9%) Same-store SA and UK achieved rental rate up 7.6% and 8.0% respectively Port
Slide 6: Snapshot
SNAPSHOT Listing date November 2015 JSE sector Speciality REITs Profile Highly specialised, low risk, income paying self storage REIT Self storage 11 publicly traded self storage REITs universe (US: 6, UK: 2, EU: 1, Aus: 1, SA: 1) Market R6.0 billion1 capitalisation Total South Africa United Kingdom
Slide 7: Share Price Performance – Relative to SAPY
SHARE PRICE PERFORMANCE – RELATIVE TO SAPY 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.180% 170 45 40 150 35 Number of shares (Millions) 130 126 30 Indexed price 110 25 90
Slide 8: Share Price Performance – Relative to UK Peers
SHARE PRICE PERFORMANCE – RELATIVE TO UK PEERS 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 peers. 420
Slide 9: The Market
THE MARKET • 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, 2compared 050 to 9.4 sqf in the US, 2.1 sqf in Australia and 0.25 sqf in mainland 83.3% 3 375 Europe Self storage properties, Occup
Slide 10: The Market (continued)
THE MARKET (continued) • A recent report¹ by JLL made the following observations on the UK and European self storage market › Strong market sentiment prevalent towards the sector › The sector has strong inflation-linked characteristics › The sector is structurally under supplied, with the current ma
Slide 11: Financial Review
FINANCIAL REVIEW STOR-AGE PROPERTY REIT LIMITED 11
Slide 12: Occupancy Summary
OCCUPANCY SUMMARY SA 31 March 2023 31 March 2022 GLA m2 Occupied m2 % occupied GLA m2 Occupied m2 % occupied Own portfolio 387 100 352 300 91.0% 380 700 335 000 88.0% JV portfolio 6 300 5 900 93.7% 4 100 4 000 97.2% Total 393 400 358 200 91.1% 384 800 339 000 88.1% Same-store 360 800 332 600 92.2% 3
Slide 13: 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 3 10 13 Total – trading properties 57 36 93 Under development 4 4 8 Total – including properties under development 61 40
Slide 14: Trading Results SA
TRADING RESULTS SA R million 31 March 2023 31 March 2022 % change Non same- Non same- Same-store Total Same-store Total Same-store Total store store Rental income Self storage 479.5 27.7 507.2 436.6 9.9 446.5 9.8% 13.6% Other 8.6 0.8 9.4 8.9 0.6 9.5 (3.4)% (1.2)% Ancillary income 19.9 1.2 21.1 18.5
Slide 15: Trading Results UK
TRADING RESULTS UK £’000 31 March 2023 31 March 2022 % change Non same- Non same- Same-store Total Same-store Total Same-store Total store store Rental income Self storage 19 300 2 392 21 692 17 730 408 18 138 8.9% 19.6% Other 535 411 946 538 3 541 (0.6)% 74.9% Ancillary income 1 917 361 2 278 1 782
Slide 16: Management Fees
MANAGEMENT FEES R million 31 March 2023 31 March 2022 Recurring fees Property management fees (including UK franchisee licence fees) 11.0 4.8 Digital First 5.3 1.4 Total – recurring fees 16.3 6.2 Non – recurring JV development fees - SA 5.2 0.4 JV development fees – UK 8.9 - JV acquisition fees – SA
Slide 17: Distribution Analysis
DISTRIBUTION ANALYSIS R million 31 Mar 2023 31 Mar 2022 Total Total Net property operating income - SA 408.5 363.8 Net property operating income - UK 364.9 307.3 Waterfall – loss of revenue claim 10.5 10.3 Rental guarantee and underpin 5.6 4.5 Non-core income 1.0 - Management fees 36.0 14.6 Administ
Slide 18: Balance Sheet – Summarised
BALANCE SHEET – SUMMARISED R million 31 Mar 31 Mar 31 Mar 31 Mar 2023 2022 2023 2022 ASSETS LIABILITIES Non-current assets Non-current liabilities Investment properties 10 398 9 264 Bank debt 3 390 2 599 ZAR 1 188 1 141 SA Freehold 4 994 4 929 GBP 2 202 1 458 SA Leasehold 174 116 Derivatives mark-to
Slide 19: Net Asset Value per Share
NET ASSET VALUE PER SHARE R million 31 Mar 2023 31 Mar 2022 Net asset value (NAV) excluding NCI 7 136.2 6 597.0 Less: Goodwill and intangible assets (156.0) (145.7) Tangible net asset value (TNAV) 6 980.2 6 451.3 Deferred tax relating to UK investment property revaluations 369.1 287.4 Adjusted TNAV
Slide 20: Capital Structure
CAPITAL STRUCTURE ZAR facilities GBP facilities GBP facilities Total facilities Rm £m Rm Rm Total debt facilities 1 872.0 115.0 2 530.8 4 402.8 Undrawn debt facilities 455.8 13.5 296.7 752.4 Gross debt 1 416.2 101.5 2 234.2 3 650.4 Gross debt net of cash held in debt facilities 1 360.2 101.5 2 234.2
Slide 21: Property Valuations
PROPERTY VALUATIONS VALUATION BREAKDOWN Average % of Discount Exit cap Rm value per portfolio m² rate rate • External valuation policy SA › SA – 50% at each reporting period Freehold and long leasehold 4 994.6 96.6% (year end and interims) Short leasehold 173.7 3.4% › UK – 100% at year end Total 5 1
Slide 22: Currency Hedging
CURRENCY HEDGING HEDGING OF NET INVESTMENT IN STORAGE KING £ million 31 Mar 2023 31 March 2022 Investment property 250.7 232.6 Leasehold liabilities (13.0) (11.8) Net investment property 237.7 220.8 Bank debt (101.5) (84.9) Cash 4.1 2.7 Other assets 10.2 7.8 Other liabilities (23.3) (26.0) Net inves
Slide 23: Load Shedding – Impact in SA
LOAD SHEDDING – IMPACT IN SA Our properties • Are not crowded environments, have a small onsite staff complement and are typically low-intensity in their use of energy • Electricity costs ~4.0% of direct operating costs and < 1.0% of revenue Current status • Diesel spend FY23 – c. R3.0 million • Bas
Slide 24: UK REIT Adoption – Storage King
UK REIT ADOPTION – STORAGE KING • Stor-Age board is electing to classify the Storage King group of companies as a UK REIT › From 1 July 2023 › Subject to HMRC approval UK REIT adoption • A group of companies can be treated as a UK REIT if the holding company meets certain conditions and the group as
Slide 25: The Big Picture
THE BIG PICTURE • Global economic growth outlook clouded – inflation persisting and high interest rates • Self storage business model – proven track record of resilience • Demand – underpinned by life-changing events and dislocation Macro and › Positive or negative in nature sector themes › Customer
Slide 26: Property Review
PROPERTY REVIEW STOR-AGE PROPERTY REIT LIMITED 26
Slide 27: South Africa – Acquisitions and Developments
SOUTH AFRICA – ACQUISITIONS AND DEVELOPMENTS Acquisitions • Think Secure Self Storage – located in Parklands (Cape Town) and acquired in November 2022 for R65.0 million Developments • Morningside – 7 400m² GLA development completed in the Nedbank JV in May 2023 at an estimated cost of R125.0 million
Slide 28: Nedbank JV
NEDBANK JV Overview • Entered JV with Nedbank Corporate and Investment Bank, acting through Nedbank Property Partners – FY22 • Morningside development completed in May 2023 • Three high profile properties under development – estimated 16 700m² GLA, at a total cost of approximately R247.0 million › B
Slide 29: Storage King
STORAGE KING Overview • 6th largest UK self storage brand – operating 39¹ properties throughout England, with a further four properties in the pipeline • Four strategic growth levers – expanding existing properties, acquiring independent trading stores, developing new high-quality properties and sec
Slide 30: Nuveen JV and Easistore Acquisition
NUVEEN JV AND EASISTORE ACQUISITION Overview • Entered JV with Nuveen Real Estate (“Nuveen”) – equity capital contributions in the ratio 90:10 (Nuveen:Stor-Age) • Acquired four-property Easistore portfolio – £82.0 million, 242 195 sqf (22 500m²) GLA • Predominantly modern, bespoke, purpose-built pro
Slide 31: Moorfield JV
MOORFIELD JV Overview • JV entered with Moorfield in FY21 to assemble a portfolio of high-quality self storage assets across the UK, by developing and acquiring properties with a focus on London (its commuter towns), the south east and key regional towns and cities • Key terms › Equity capital contr
Slide 32: Moorfield JV (continued)
MOORFIELD JV (continued) Portfolio summary Number of developments 4 Number of trading properties (including Bath) 5 Total number of properties 9 GLA and occupancy (m²) at 31 March 2023 GLA – development properties 25 600 GLA – trading properties 25 200 GLA – all properties 50 800 Occupied space (m²)
Slide 33: Moorfield JV (continued)
MOORFIELD JV (continued) Developments Property Status Estimated development cost Estimated GLA Bath Opened for trading in May 2023. £11.7 million 46 000sqf / 4 300m² Under construction. Heathrow £13.8 million 61 000sqf / 5 700m² Scheduled to open in the second quarter of FY24. Under construction. Ca
Slide 34: Environmental, Social and Governance
ENVIRONMENTAL, SOCIAL AND GOVERNANCE STOR-AGE PROPERTY REIT LIMITED 34
Slide 35: 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 36: Annual Impact of Renewable Energy
ANNUAL IMPACT OF RENEWABLE ENERGY • C02 emissions¹ avoided – 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 consumption are lower as c
Slide 37: Typical SA Property
TYPICAL SA 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 – 34. Solar power generated to date – 4.3 million kWh Motion-sensitive LED
Slide 38: Social
SOCIAL 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 groups, chari
Slide 39: Social (continued)
SOCIAL (continued) Stor-Age Business Hub • 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 sustainable job creation and economic development • In SA › 55% + of commercial customers cla
Slide 40: Operations Review
OPERATIONS REVIEW STOR-AGE PROPERTY REIT LIMITED 40
Slide 41: Platform Driven by Data
PLATFORM DRIVEN BY DATA 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 • Improve sales
Slide 42: Platform Advantage
PLATFORM ADVANTAGE Typical competitor Stor-Age Customer targeting Search Engine Multimarket Google advertising Creative Outsourced marketing services Optimisation contact centre specialists suite Revenue management Manual process Dynamic revenue management Intelligent choices Instinct Data Analytics
Slide 43: Extensive Digital Marketing Capabilities
EXTENSIVE DIGITAL MARKETING CAPABILITIES Highly skilled, specialised and scalable with significant capabilities to react to changing digital landscapes Accredited digital marketing agency Google and Meta partners An effective LinkedIn strategy Showcasing company culture, driving recruitment and reco
Slide 44: Digital First – Digital Marketing Platform
DIGITAL FIRST – DIGITAL MARKETING PLATFORM Key features UK 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 and Meta marketing
Slide 45: Outlook
OUTLOOK • A robust operational performance, with growth in revenue, earnings and cash flow in a challenging environment • Macro and political environment uncertainty – continued impact on inflation, higher interest rates and currency movements • A higher interest rate environment will inevitably hav
Slide 46: Annexures
ANNEXURES A. B. Investment case Strategy F. G. UK developments The platform C. Portfolio overview H. Our customers D. Portfolio analysis I. Digital First – overview E. SA developments J. UK and European self storage industry – overview STOR-AGE STOR-AGE PROPERTY PROPERTY REITLIMITED REIT LIMITED 46
Slide 47: Investment Case
INVESTMENT CASE Annexure A • 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 48: Strategy
STRATEGY Annexure B 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 49: Strategy (continued)
STRATEGY (continued) Annexure B 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 50: Portfolio Overview
PORTFOLIO OVERVIEW Annexure C 93 The portfolio comprises 57 properties in SA and 36 properties in the UK SA PORTFOLIO UK PORTFOLIO² 57¹ properties 36¹ properties R5.4bn³ R5.8 bn³ (£262 million) 393 400m² GLA⁴ 133 000m² GLA⁴ 30 300 tenants⁴ 16 800 tenants⁴ 57 36 1. As at 31 May 2023 2. An additional
Slide 51: Portfolio Analysis
PORTFOLIO ANALYSIS Annexure D Total property value¹ Total number of tenants² Total GLA² Total number of properties³ R11.13bn 47 100 526 400m2 93 Value of properties Number of tenants GLA Number of properties 36% 25% 39% 48% 52% 64% 75% 61% South Africa UK 1. Total net investment property value, incl
Slide 52: Bryanston – Current Development
BRYANSTON – CURRENT DEVELOPMENT Annexure E 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 traff
Slide 53: Pinelands – Current Development
PINELANDS – CURRENT DEVELOPMENT Annexure E 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 completion (on full fit-out) and Forest Drive is being developed in t
Slide 54: Paarden Eiland – Current Development
PAARDEN EILAND – CURRENT DEVELOPMENT Annexure E 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 GLA
Slide 55: Century City – Current Development
CENTURY CITY – CURRENT DEVELOPMENT Annexure E Located prominently on Edison Way just off Bosmasdam 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-o
Slide 56: SA Pipeline Development – Kramerville
SA PIPELINE DEVELOPMENT – KRAMERVILLE Annexure E 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 four levels and will comprise Dartfield Bowling Road an estim
Slide 57: Heathrow – Current Development
HEATHROW – CURRENT DEVELOPMENT Annexure F 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 inter
Slide 58: Canterbury – Current Development
CANTERBURY – CURRENT DEVELOPMENT Annexure F 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 59: West Bromwich – Current Development
WEST BROMWICH – CURRENT DEVELOPMENT Annexure F 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 centre
Slide 60: Acton – Future Development
ACTON – FUTURE DEVELOPMENT Annexure F 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: The Platform
THE PLATFORM Annexure G • 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 62: Our Customers
OUR CUSTOMERS Annexure H GEOGRAPHIC REPRESENTATION1 RESIDENTIAL / COMMERCIAL TENANT MIX BY GLA2 Gauteng Residential 25 Western Cape 33 Commercial 37 Eastern Cape 1 KwaZulu-Natal 7 Free State 67 4 United Kingdom 26 GEOGRAPHIC FOCUS RESIDENTIAL vs COMMERCIAL Primary focus = high profile locations in J
Slide 63: Our Customers (continued)
OUR CUSTOMERS (continued) Annexure H AVERAGE LENGTH OF STAY – SA AVERAGE LENGTH OF STAY – UK < 6 Months < 6 Months 23 29 31 6 - 12 Months 27 6 - 12 Months 11 > 12 Months > 12 Months 11 2 - 3 Years 2 - 3 Years 17 15 20 16 > 3 Years > 3 Years DEMAND PROFILE – SA DEMAND PROFILE – UK Two significant use
Slide 64: Business Customers – Adding Value to SA Economy
Annexure H BUSINESS CUSTOMERS – ADDING VALUE TO SA ECONOMY Our commercial customers¹ 55% 15% 63% 80% 28% SMMEs Entrepreneurs Operational Inventory 3 – 5kms from requirements and stock their store Contribution to the local economy¹ Considering that we had approximately 8 300 commercial tenants at yea
Slide 65: Digital First – Overview
DIGITAL FIRST – OVERVIEW Annexure I 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 66: UK and European Self Storage Industry – Overview
Annexure J UK AND EUROPEAN SELF STORAGE INDUSTRY – OVERVIEW UK self storage industry¹ European self storage industry (excluding UK)³ 2 231 83.3% 3 375 Self storage properties, Occupancy on current Self storage properties includes 739 container lettable area operators 71.6 million sqf Population 84%
Slide 67: UK Self Storage Industry – Rate and Occupancy
UK SELF STORAGE INDUSTRY – RATE AND OCCUPANCY Annexure J Source: The Self Storage Association UK annual industry report, May 2023 STOR-AGE PROPERTY REIT LIMITED 67
Slide 68: 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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