Stor-age Property Reit Ltd. · JSE:SSS
Stor-age Property Reit — Investor Presentation (October 2017)
47 slides from Stor-age Property Reit's investor presentation, October 2017
Slide 1: Storage King Investor Presentation
STOR-AGE PROPERTY REIT STORAGE KING INVESTOR PRESENTATION October 2017
Slide 2: Presentation Outline
PRESENTATION OUTLINE Page Executive summary 4 Stor-Age • Snapshot at 31 March 2017 6 • Investment case 7 • Strategy 8 • Performance overview 9 • Portfolio overview 11 Storage King • Strategic entry into UK market 13 • Overview of UK self storage industry 14 • Overview of Storage King 15 • Proposed T
Slide 3: Annexures
ANNEXURES A Initial purchase consideration reconciliation B Schedule of Storage King properties C Key metrics – Listed Portfolio D Detailed Storage King property information E Management team structure and CVs F UK self storage industry rental rates and occupancy G UK self storage REIT performance H
Slide 4: Executive Summary
EXECUTIVE SUMMARY • Ability to issue up to 89 million new shares • Timing, pricing and final quantum of placement to be finalised in due course, subject to market Capital raise conditions • Shares will be issued cum interim dividend (expected payment date: 11 December 2017) • Capital raise will allo
Slide 5: Stor-Age
STOR-AGE STOR-AGE PROPERTY REIT LIMITED 5
Slide 6: Snapshot at 31 March 2017
SNAPSHOT AT 31 MARCH 2017 Listing date November 2015 JSE sector Speciality REITs Highly specialised, low risk, income Profile paying self storage REIT 9 publicly traded self storage REITs Self storage universe (US: 5, UK: 2, Aus: 1, SA: 1) Market capitalisation R2.1 billion1 Listed Portfolio – prope
Slide 7: Investment Case
INVESTMENT CASE • Dynamic self storage sector specialists, allowing for focused attention, delivering superior returns • Sector leader in South Africa and strategic entry into UK market with acquisition of top 10 operator • Sophisticated operating platform and benefits of scale across both markets •
Slide 8: Strategy
STRATEGY Outstanding Sector specialists with deep product understanding and established global peer networks locations Highly strategic in planning and execution at both macro (asset) and micro (operational) level High quality properties South Africa – currently in Y3 of second 5Y strategic plan: on
Slide 9: Performance Overview
PERFORMANCE OVERVIEW Financial (31 March 2017) • Total distribution up 10% to 88.05 cps for full year • Dividend per share 43.04 cents (for 6 months ended 31 March 2017) – 6% higher than listing forecast • Conservative gearing of 12% – of which 79% fixed • Investment property valued at R2.1 billion
Slide 10: Performance Overview (Continued)
PERFORMANCE OVERVIEW (CONTINUED) Share price performance relative to SA Listed Property Index (since listing) Share performance R400 million equity capital raised 37 million shares issued at R10.81 2.5% discount to 30 day VWAP price of R11.09 130% 120% Unexpected change to SA Finance Minister 110% 1
Slide 11: Portfolio Overview
PORTFOLIO OVERVIEW Our portfolio comprises 44 properties: 44 31 in the Listed Portfolio and 13 in the Managed Portfolio 11 Pretoria 441 properties R3.1bn 11 Johannesburg 18 500 + 333 000 m² tenants Bloemfontein 1 31 3 Durban R2.1bn properties 15 000 + 238 000 m² tenants 16 Cape Town 2 Port Elizabeth
Slide 12: Storage King
STORAGE KING STOR-AGE PROPERTY REIT LIMITED 12
Slide 13: Strategic Entry into UK Market
STRATEGIC ENTRY INTO UK MARKET • Sector growth in UK is positive, with increasing demand • Supply remains constrained - undersupply in comparison to more established US and Australian markets • Average net rentals and occupancies across UK sector increasing attractively Resilient sector • Post Brexi
Slide 14: Overview of UK Self Storage Industry
OVERVIEW OF UK SELF STORAGE INDUSTRY • A growing and fragmented industry • 1 430 + self storage properties, offering approximately 42.2 million sqf of space Overview • Six largest operators only own 315 properties (22%) • A significant growth opportunity - relative undersupply in comparison to the m
Slide 15: Overview of Storage King
OVERVIEW OF STORAGE KING The 13 properties currently offer c. 543 100 sqf of Gross Lettable Area (‘GLA’), with an average occupancy of 78.9% and an average rental rate of £21.99 per sqf per annum. On full fit-out, the GLA will increase to approximately 577 300 sqf. Overview UK store locations • 6th
Slide 16: Proposed Transaction
PROPOSED TRANSACTION • Stor-Age to acquire 97.3% of issued shares of Storage King • Total consideration for the Proposed Transaction is £77.13 million Salient • Existing debt facility to be replaced with approved new facility of £25 million (for Core Portfolio) terms • Initial purchase consideration
Slide 17: Storage King Forecast Earnings (Core Portfolio)
STORAGE KING FORECAST EARNINGS (CORE PORTFOLIO) Period ending1 Year ending Period ending1 Year ending 31-Mar-18 31-Mar-19 31-Mar-18 31-Mar-19 £000 £000 R000 R000 Rental income 3 451 8 785 59 529 155 314 Other rental income (office, bulk, parking) 277 661 4 783 11 681 Ancillary income 429 1 100 7 405
Slide 18: Principal Assumptions
PRINCIPAL ASSUMPTIONS 12 months 12 months 12 months 5 months 12 months ending ending ending ending ending Dec 171 Dec 181 Dec 191 Mar 18 Mar 19 Increase in sqf 19 300 14 800 12 700 - 14 300 Occupancy growth • Occupancy growth YTD (Jan 17 - Aug 17) of 21 000 sqf – full year 2017 forecast already achi
Slide 19: Principal Assumptions (Continued)
PRINCIPAL ASSUMPTIONS (CONTINUED) • Forecasts assume same level of current expenditure - no allowance for any savings from leveraging off SA Operating and operating infrastructure e.g. marketing and finance administration costs • Cost inflation of 3.0% p.a. • 80% of debt fixed at 3.85% per annum and
Slide 20: Storage King Forecast Earnings (Crewe Property)
STORAGE KING FORECAST EARNINGS (CREWE PROPERTY) Period ending1 Year ending Period ending1 Year ending 31-Mar-18 31-Mar-19 31-Mar-18 31-Mar-19 £000 £000 R000 R000 Rental income 191 651 3 292 11 514 Ancillary income 8 24 139 420 Total income 199 675 3 431 11 934 Direct operating costs (78) (237) (1 33
Slide 21: Storage King Forecast Distributable Earnings
STORAGE KING FORECAST DISTRIBUTABLE EARNINGS Period ending Year ending 31-Mar-18 31-Mar-19 R000 R000 Distributable earnings 25 833 73 773 Core Portfolio 27 726 75 704 Crewe property (1 893) (1 931) Cross currency interest rate swap effects 12 460 29 663 Core Portfolio 10 458 24 903 Crewe property 2
Slide 22: Pro-forma Effects – Distributions per Share
PRO-FORMA EFFECTS – DISTRIBUTIONS PER SHARE 12 months to 31 Mar 2018 Stor-Age base case before Storage King acquisition and capital raise Key assumptions Distributions per share (cents) 96.4 • 78.079 million new Stor-Age shares to Forecast growth in distributions (2017 distribution of 88.05 be issue
Slide 23: Pro-forma Balance Sheet
PRO-FORMA BALANCE SHEET Actual 31 Mar 17 Pro Forma Rm Rm Investment properties 2 050 3 4332 Freehold 2 050 3 266 Net investment in leaseholds - 167 Share purchase scheme loans 125 125 Goodwill and intangible assets 84 159 Other non-current assets 4 26 Total assets 2 263 3 743 Net debt 245 780 Divide
Slide 24: Capital Structure
CAPITAL STRUCTURE • Conservative target gearing range 25% - 35% • Gearing levels (after implementation of the Proposed Transaction) approximately 24% • Effective interest rate – SA facilities 9.42% • Effective interest rate – UK facility 3.75% • £27m debt facility in Storage King • Implementation of
Slide 25: Capital Structure (Continued)
CAPITAL STRUCTURE (CONTINUED) • UK debt facility › Royal Bank of Scotland has provided a £27 million debt facility › £25 million in respect of the Core Portfolio and £2 million to support the acquisition of the Crewe property › Term = 5 years › Maximum LTV ratio = 50% › Pricing – Year 1: LIBOR + 300
Slide 26: Portfolio: Post the Proposed Transaction
PORTFOLIO: POST THE PROPOSED TRANSACTION Post the Proposed Transaction, our listed portfolio will comprise 44 properties: 31 in SA and 13 in the UK. Stor-Age has a further 58 13 properties in its Managed Portfolio (SA), as well as the Crewe property (secured) in the UK - bringing the total propertie
Slide 27: Portfolio: Post the Proposed Transaction (Continued)
PORTFOLIO: POST THE PROPOSED TRANSACTION (CONTINUED) Pre Proposed Post Proposed Transaction Storage King Transaction Trading Portfolio Properties 44 141 58 GLA (m2) 333 000 54 5002 387 500 Value (Rm) 3 025 1 383 4 408 Listed Portfolio Properties 31 141 45 GLA (m2) 238 000 54 500 292 500 Value (Rm) 2
Slide 28: Conclusion
CONCLUSION Opportunity for • UK self storage market represents a significant growth opportunity strategic entry • Robust macro environment in the UK but with a relative undersupply of self storage into growing first world market • Attractive sector fundamentals in SA and the UK • High quality proper
Slide 29: Annexures
ANNEXURES STOR-AGE PROPERTY REIT LIMITED 29
Slide 30: Initial Purchase Consideration Reconciliation
INITIAL PURCHASE CONSIDERATION RECONCILIATION Annexure A millions Total consideration £ 77.13 Less: RBS debt facility (Existing debt facility to be replaced with approved) £ (25.00) Plus: Working capital adjustment (includes cash of £4.76m) £ 2.68 Initial purchase consideration for 100% of Storage K
Slide 31: Schedule of Storage King Properties
SCHEDULE OF STORAGE KING PROPERTIES Annexure B Maximum Weighted Aug 17 GLA Lettable Area Occupancy average rental Independent Properties Ownership Region (sqf) (sqf) GLA (Aug 17) sqf (£) valuation (£000) Aylesford Leasehold South East 42 635 43 325 87% 22.14 2 240 Basildon Leasehold East 43 691 45 3
Slide 32: Key Metrics – Listed Portfolio
KEY METRICS – LISTED PORTFOLIO Annexure C Pre Proposed Transaction Pro-forma post Proposed Transaction Total property value (Rbn) 2.050 3.4331,2 Total number of tenants 15 000 + 21 300 + Total GLA³ (m²) 238 000 292 5005 13 SA Portfolio Number of properties (SA) 31 UK Portfolio 31 35 (SA)⁴ Value of p
Slide 33: Detailed Property Information – Aylesford and Basildon
DETAILED PROPERTY INFORMATION – Annexure D AYLESFORD AND BASILDON Aylesford Basildon Ownership Leasehold Ownership Leasehold Opened in October 2007 and purchased by Storage • Storage King represents a highly King in 2009. scalable Located operating in an industrial business estate, close to Opened i
Slide 34: Cambridge and Dartford
CAMBRIDGE AND DARTFORD Cambridge Dartford Ownership Freehold Ownership Freehold • Storage King represents Opened in 2008 andscalable a highly purchased by Storage operating King in business Opened in 2005 and purchased by Storage King in Description 2011. Located just off the M11 and A14 and 15 minu
Slide 35: Derby and Doncaster
DERBY AND DONCASTER Derby Doncaster Ownership Freehold Ownership Freehold • Storage King represents Opened in 2008 andscalable a highly purchased by Storage operating King in business Opened in 2008 and purchased by Storage King in Description 2013. Located close to A61 and A52, Derby city Descripti
Slide 36: Dunstable and Epsom
DUNSTABLE AND EPSOM Dunstable Epsom Ownership Leasehold Ownership Leasehold Opened in October 2007 and purchased by Storage • Storage King represents King in 2009.a highly Locatedscalable operating in an industrial business estate, easily Opened in August 2008 and purchased by Storage Description De
Slide 37: Gloucester and Milton Keynes
GLOUCESTER AND MILTON KEYNES Gloucester Milton Keynes Ownership Freehold Ownership Freehold • Storage King represents Opened and a purchased by Storage highly scalable King in operating 2009. business Opened in 1998 and purchased by Storage King in Description Located just off the M4 and A417 close
Slide 38: Oxford and Woodley
OXFORD AND WOODLEY Oxford Woodley Ownership Freehold Ownership Leasehold Opened in 2007 and purchased by Storage King in • Storage King represents a highly 2015. Located close scalable to Oxfordoperating business city and easily Opened in 2007 and purchased by Storage King in Description Description
Slide 39: Chester and Crewe
CHESTER AND CREWE Chester Crewe Ownership Freehold Ownership Freehold • Storage King represents Purchased abyhighly Storage King inoperating scalable January 2017. Located business Storage King have entered into an agreement to Description just off A548 alongside Tesco and Aldi in ‘big box’ retail D
Slide 40: Management Team Structure and CVs
MANAGEMENT TEAM STRUCTURE AND CVs Annexure E Robin Greenwood Terry Doman • Terry joined Storage King as Operations manager in December 2010 from Shurgard Self Storage CEO Head of Operations • Terry started working in self storage in late 1999 for Shurgard Self Storage as an Assistant Store Manager a
Slide 41: UK Self Storage Industry Rental Rates and Occupancy
UK SELF STORAGE INDUSTRY RENTAL RATES AND OCCUPANCY Annexure F Despite domestic economic uncertainty, the industry enjoyed rental rate increases well in excess of inflation as well as occupancy growth during 2016 Rental rates 29.3 29.5 27.3 23.0 22.68 35 Net rental rate (£ p-er sqf) 22.2 21.9 21.5 2
Slide 42: UK Self Storage REITs Performance
UK SELF STORAGE REITS PERFORMANCE Annexure G The listed UK self storage REIT counters have performed attractively relative to the general UK REIT sector Share price performance of UK based self storage REITS (rebased to 100%) 125% 120% 8 June 2017: UK 115% general election 110% 105% 100% 95% 90% 85%
Slide 43: UK Leasehold Investments
UK LEASEHOLD INVESTMENTS Annexure H • Common practice in the UK to acquire properties under leasehold - Storage King portfolio includes 5 leasehold properties, average remaining lease term approximately 17 years • All leases governed by the Landlord and Tenant Act - salient terms include • Notice ca
Slide 44: UK Economic Overview Post Brexit
UK ECONOMIC OVERVIEW POST BREXIT Annexure I • The UK economy expanded 0.3% on quarter in the three months UK GDP growth forecast to June 2017, unrevised from the second estimate of GDP and 2.0% 1.8% 1.8% following an upwardly revised 0.3% expansion in the previous 1.8% 1.6% period 1.6% 1.4% • Growth
Slide 45: UK Economic Overview Post Brexit (Continued)
UK ECONOMIC OVERVIEW POST BREXIT (CONTINUED) UK business confidence levels UK consumer price inflation 40 3.0 2.8 30 2.5 2 20 2.0 BCM index 1.6 10 1.5 0 1.0 0.6 -10 0.5 0.1 -20 0.0 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Mar-13
Slide 46: UK Economic Overview Post Brexit (Continued)
UK ECONOMIC OVERVIEW POST BREXIT (CONTINUED) Historical and forward short term interest rate movements 0.7% 0.6% 0.6% 0.5% 0.5% 0.4% 0.4% 0.3% 0.3% 0.3% 0.2% 0.1% 0.0% 2015 2016 2017 2018 2019 Mortgage approvals • The Bank of England cut interest rates in 2016 in order to sustain 50 000 the economy
Slide 47: Disclaimer and Confidentiality
DISCLAIMER AND CONFIDENTIALITY This document is strictly confidential and is not for publication or circulation. All information contained herein is strictly confidential and proprietary and may not be copied, reproduced, communicated, transmitted or distributed, in whole or in part, to any person o
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