Stor-age Property Reit Ltd. · JSE:SSS
Stor-age Property Reit — FY2016 Earnings Presentation
55 slides from Stor-age Property Reit's earnings presentation, June 2016
Slide 1: Annual Results Presentation
STOR-AGE PROPERTY REIT ANNUAL RESULTS PRESENTATION YEAR ENDED 31 MARCH 2016
Slide 2: Presentation Outline
PRESENTATION OUTLINE • At a glance • Highlights • Financial review • Strategy • Property review • Operations review • Sales, marketing & the brand • Outlook STOR-AGE PROPERTY REIT LIMITED 2
Slide 3: Appendices
APPENDICES 1. Income statement and earnings reconciliation 2. Schedule of properties 3. Pipeline of properties 4. Valuation methodology 5. Self storage 101 6. The market 7. Self storage at a glance 8. Differentiators STOR-AGE PROPERTY REIT LIMITED 3
Slide 4: Our people, both customers & staff, are at the heart of our business
Our people, both customers & staff, are at the heart of our business … STOR-AGE PROPERTY REIT LIMITED 4
Slide 5: At a Glance
AT A GLANCE Investment case • Leading & largest self storage property fund in South Africa • Niche asset class uncorrelated to traditional drivers of property – recession-resilient sector • Business model based on global self storage REIT outperformers • Attractive forecast distribution growth in me
Slide 6: Highlights
HIGHLIGHTS Performance (4.5 months – listing to YE) • R1.4 billion raised in oversubscribed IPO – November 2015 • Distributable earnings R38.9 million – 23% higher than listing forecast • Dividend per share 30.07 cents – 5% higher than listing forecast • Conservative gearing of 8.7% – 84% fixed unti
Slide 7: Portfolio and Performance – Snapshot
PORTFOLIO AND PERFORMANCE – SNAPSHOT Listed portfolio Managed portfolio Trading portfolio Number of properties 24 9 33 Portfolio value (Rm) 1 370 530 1 900 GLA - m² 181 500 55 000 236 500 Number of tenants 11 800 + 2 500 + 14 300 + Listed portfolio Occupancy 86% (82.7% at listing) Rental rate per m²
Slide 8: Portfolio and Performance – Snapshot (Continued)
PORTFOLIO AND PERFORMANCE – SNAPSHOT (CONTINUED) 100% 4 000 m² 80 11%* 50 23% 32 5% 76.3 30.07 90% 40 38.9 30 86% 75 83% 28.72 72.6 31.5 80% 30 28 70 70% 20 26 65 60% 10 24 50% 60 0 22 Occupancy Rental rate per m² Distributable earnings Distribution per share (Rm) (cents) Forecast Actual *Annualised
Slide 9: Financial Review
FINANCIAL REVIEW STOR-AGE PROPERTY REIT LIMITED 9
Slide 10: Earnings and Distribution
EARNINGS AND DISTRIBUTION Actual Listing Forecast • Rental income up 3.1% compared Earnings and distribution Rm Rm to forecast Rental income 53.3 51.7 • Lower drawdown on rental underpin – R4.4m still available Rental underpin 1.6 3.2 • Growth in occupancy c. 4 000m² Other income 2.0 1.4 – closing o
Slide 11: Balance Sheet - Summarised
BALANCE SHEET - SUMMARISED Rm Rm ASSETS LIABILITIES Non-current assets Non-current liabilities Investment properties 1 371 Bank debt 129 Share purchase scheme loans 120 Finance lease 3 Intangible assets and goodwill 82 Non-current liabilities 132 Other non-current assets 1 Current liabilities Non-cu
Slide 12: Capital Structure
CAPITAL STRUCTURE • Conservative target gearing range of 25% - 35% • Strategic decision at time of listing to reduce gearing levels • 8.7% gearing at YE vs 50% LTV facility • Effective interest rate 9.39% • R521 million of undrawn facilities at YE • R129 million drawn at YE, with net debt at R119 mi
Slide 13: Strategy
STRATEGY STOR-AGE PROPERTY REIT LIMITED 13
Slide 14: 2020 Strategic Growth Plan
2020 STRATEGIC GROWTH PLAN • Strategic planning conducted in five year cycles • 4 projects undertaken in 2014 & 2015 to prepare: supply side study, demand projections, SA demographics research, customer profiling • Currently in Y1 to 2020 • Plan is centred on both developing new properties and acqui
Slide 15: Strategic Planning & Demographics
STRATEGIC PLANNING & DEMOGRAPHICS HOUSEHOLD INCOME HIGH LOW POPULATION DENSITY HIGH LOW STOR-AGE PROPERTY REIT LIMITED 15
Slide 16: Property Strategy
PROPERTY STRATEGY Stor-Age intends enhancing performance & returns by: • Extracting organic growth through active revenue management, improving the unit mix &/or developing additional GLA at existing properties • Leveraging the management platform to extract value & drive cost efficiencies • Pursuin
Slide 17: Understanding our customers' needs drives everything that we do
Understanding our customers’ needs drives everything that we do … STOR-AGE PROPERTY REIT LIMITED 17
Slide 18: Property Review
PROPERTY REVIEW STOR-AGE PROPERTY REIT LIMITED 18
Slide 19: Portfolio
PORTFOLIO 33 R1.9bn 11 PRETORIA properties 8 6 JOHANNESBURG 14 300 + 236 000 m² tenants BLOEMFONTEIN 1 2 2 DURBAN 24 R1.4bn properties 11 800 + 181 000 m² 11 CAPE TOWN 2 PORT ELIZABETH tenants Trading portfolio: 33 properties, R1.9bn, 236 000m², 14 300 + tenants Trading portfolio Listed portfolio Li
Slide 20: Portfolio Overview
PORTFOLIO OVERVIEW PROPERTIES Total number of properties 43 ‘Trading Portfolio’ consists of: ‘Listed Portfolio’ (‘Mature’ assets) 24 ‘Managed Portfolio’ 9 Secured & to be developed 10 LISTED PORTFOLIO Gross asset value R1.4 billion GLA 181 500 m² 2017 forecast distribution growth (annualised) 10% PI
Slide 21: Listed Portfolio
LISTED PORTFOLIO • Total properties 24 • Total property value R1.4 billion • Total GLA 181 500 m² • Developable GLA (town planning in place) 20 000 m² + • Average property size (GLA) 7 700 m² + • Total number of tenants 11 800 + • Average rental rate R76.3/m² • Portfolio occupancy 86% • Long-term ta
Slide 22: Listed Portfolio – Development Activity
LISTED PORTFOLIO – DEVELOPMENT ACTIVITY • Gardens & Durbanville currently undergoing expansion • Both projects funded from existing debt facilities • Forecasted to be yield neutral within first 12 months of trading & yield enhancing thereafter • Forecasted to provide immediate uplift to portfolio NA
Slide 23: Pipeline
PIPELINE • Measured approach to new developments Target criteria • 19 properties = c. 140 000 m² GLA: for new developments › 9 currently trading (‘Managed Portfolio’) • JHB, PTA, CT, DBN › Managed Portfolio dominated by high profile ‘Big Box’ properties in • Main road frontage with good outstanding
Slide 24: Operations Review
OPERATIONS REVIEW STOR-AGE PROPERTY REIT LIMITED 24
Slide 25: Operations Platform
OPERATIONS PLATFORM • Highly sophisticated & scalable • Drives economies of scale & cost efficiencies • Clearly defined operating standards • Our people – key strategic focus from inception • Significant emphasis on recruiting, training, developing & managing our staff • Staff incentivised at proper
Slide 26: Highly Sophisticated Operations Platform
HIGHLY SOPHISTICATED OPERATIONS PLATFORM Outstanding Operating Web, mobile platforms locations standards & social media Contact Innovative Centre marketing Recruitment, High quality purpose Revenue training & L&D built properties management STOR-AGE PROPERTY REIT LIMITED 26
Slide 27: Revenue Management
REVENUE MANAGEMENT • Aim to achieve optimal balance between occupancy & rate • Goal = right price, for the right customer, at the right time • Dynamic pricing model • Pricing per m² based on supply & demand – location specific, stage of lease-up & timing • Powerful operating software allows for real
Slide 28: Integrated Revenue Management Strategy
INTEGRATED REVENUE MANAGEMENT STRATEGY TESTING Occupancy OPTIMISATION Pricing Promotion Market leading sector IP ANALYSES STOR-AGE PROPERTY REIT LIMITED 28
Slide 29: Our Customers
OUR CUSTOMERS • ‘My Experience Surveys’ portal drives customer standards • FY2016: 3 700 + surveys completed – average score 95% • Results & feedback drives Learning, Development & Training Programme FY2016: 3 700 + surveys completed Average score 95% STOR-AGE PROPERTY REIT LIMITED 29
Slide 30: Our Customers (Continued)
OUR CUSTOMERS (CONTINUED) GEOGRAPHIC RESPRESENTATION RESIDENTIAL / COMMERCIAL TENANT MIX BY GLA 3 4 6 23 Gauteng Residential Western Cape Commercial 27 60 Eastern Cape KwaZulu Natal 77 Free State GEOGRAPHIC FOCUS RESIDENTIAL vs COMMERCIAL Primary focus = high profile locations in Residential tenants
Slide 31: Our Customers (Continued)
OUR CUSTOMERS (CONTINUED) AVERAGE LENGTH OF STAY REASON FOR STORING < 6 months Business needs 15 13 17 6 - 12 months Excess stuff 31 4 12 > 12 months Lifestyle choice 2 - 3 years 18 Marriage / divorce > 3 years Moving 23 42 4 19 2 Renovating Other DEMAND PROFILE SELF STORAGE Demand is driven by two
Slide 32: Sales, Marketing & the Brand
SALES, MARKETING & THE BRAND STOR-AGE PROPERTY REIT LIMITED 32
Slide 33: Sales, Marketing & the Brand
SALES, MARKETING & THE BRAND • Focus on location, visibility & quality of properties, coupled with excellent customer service & leading online platform • Positioned at quality end of market – well defined, distinctive & differentiated • Foundations of brand strategy › Big branding at properties in o
Slide 34: IDEA Campaign: Case Study
IDEA CAMPAIGN: CASE STUDY 2 TVCs, 42 500 + Enquiries 200 000 + Millions reached 20 + billboard 6 radio adverts, FY2016 YouTube views on radio executions 10 GDN campaigns STOR-AGE PROPERTY REIT LIMITED 34
Slide 35: Digital Marketing & E-Commerce
DIGITAL MARKETING & E-COMMERCE • Embracing digital age in its entirety – enables cohesive brand experience • SEO results maintain most popular & searched terms • Continuously investing in the web / digital platform • Social media used strategically • Online reservation system & real time pricing mod
Slide 36: Enquiry & Web Stats
ENQUIRY & WEB STATS ENQUIRIES BY SOURCE 18 Smart phones Smart phones & tablets alone 55 account for 45% account for 38% 27 Website of web visits of all visits Telephone Walk-ins STOR-AGE PROPERTY REIT LIMITED 36
Slide 37: Optimising Demand
OPTIMISING DEMAND Optimised consumer cycle Internet Properties Life happens Contact Centre Desktop Tablet Laptop Phone Demand cycle STOR-AGE PROPERTY REIT LIMITED 37
Slide 38: Outlook
OUTLOOK • Focus on short & medium term strategic objectives › Driving occupancy, revenue & cash flow = earnings & dividends growth › Executing 2020 Growth Plan • Robust self storage sector fundamentals • FY2017 distribution guidance of 10% * reaffirmed • Healthy, conservative balance sheet • Committ
Slide 39: Appendices
• Income statement and earnings reconciliation • Schedule of properties APPENDICES • • Pipeline of properties Valuation methodology • Self storage 101 • The market • Self storage at a glance • Differentiators STOR-AGE PROPERTY REIT LIMITED 39
Slide 40: Income Statement and Earnings Reconciliation
INCOME STATEMENT AND EARNINGS RECONCILIATION Income statement R’000 Reconciliation of basic earnings, headlines earning and distribution per share R’000 Property revenue 56 900 Profit for the period 56 507 Rental income 54 907 Basic earnings 56 507 Other income 1 993 Headline earnings adjustments (1
Slide 41: Schedule of Properties – Listed Portfolio
SCHEDULE OF PROPERTIES – LISTED PORTFOLIO GLA Valuation Store name Address Province m² R’000 STOR-AGE GARDENS 121 Roeland Street, Gardens, Cape Town Western Cape 8 867 155 000 STOR-AGE TABLE VIEW 121 Koeberg Road, Corner of Koeberg and Blaauwberg Road, Table View, Cape Town Western Cape 10 087 111 0
Slide 42: Schedule of Properties – Managed Portfolio
SCHEDULE OF PROPERTIES – MANAGED PORTFOLIO GLA (full GLA capacity) Store name Address Province m² m² STOR-AGE CLAREMONT Cnr of Main Road & Brooke Street, Claremont, Cape Town Western Cape 7 944 7 944 STOR-AGE SOMERSET WEST Cnr Forsyth Road & De Beers Avenue, Somerset West, Cape town Western Cape 5 5
Slide 43: Pipeline of Properties
PIPELINE OF PROPERTIES STOR-AGE PROPERTY REIT LIMITED 43
Slide 44: Pipeline
PIPELINE Total committed pipeline subject to town planning consent 72 000 m² Anticipated GLA Site Location City Status (m²) Prime location in centre of Sunninghill Under construction SUNNINGHILL JHB 7 500 in Kikuyu Road - scheduled to open in August 2016 Prominent location alongside N3 highway Under
Slide 45: Stor-Age Sunninghill
STOR-AGE Location: Kikuyu Road GLA: 7 500 m² SUNNINGHILL Scheduled opening: August 2016 Anticipated development cost: R80 million STOR-AGE PROPERTY REIT LIMITED 45
Slide 46: Stor-Age Berea
STOR-AGE Location: Brickfield Road GLA: 8 200 m² BEREA Scheduled opening: November 2016 Anticipated development cost: R70 million STOR-AGE PROPERTY REIT LIMITED 46
Slide 47: Stor-Age Gillooly's
STOR-AGE Location: Civin Drive GLA: 8 300 m² GILLOOLY’S Scheduled opening: February 2017 Anticipated development cost: R90 million STOR-AGE PROPERTY REIT LIMITED 47
Slide 48: Stor-Age Randburg
STOR-AGE Location: Bram Fischer Ave. GLA: 7 000 m² RANDBURG Scheduled opening: June 2017 Anticipated development cost: R80 million STOR-AGE PROPERTY REIT LIMITED 48
Slide 49: Valuation Methodology
VALUATION METHODOLOGY • 10 year DCF + terminal value • Key assumptions › Forecast cash flow – occupancy, lease-up profile, rental rate escalations, direct operating costs and central administration charge (7% of revenue) › Discount & capitalisation rate › Terminal value • Income capitalisation valua
Slide 50: Self Storage 101
SELF STORAGE 101 About self storage • Storage space for personal & business use • ‘You lock – you keep the key’ • Various unit sizes ranging from 3 to 30 m² • Convenient, cost effective, secure & flexible lease period • Domestic & commercial user base › Domestic (70 - 80%) – event driven & lifestyle
Slide 51: The Market
THE MARKET International • ± 60 000 self storage properties – majority in N. America • US market – highest penetration levels • Australian market lags US market by c. 20 years – significantly more established than UK • UK market supply per capita 3X > than European average supply per capita • 9 publ
Slide 52: Self Storage at a Glance
SELF STORAGE AT A GLANCE Investment case • Premised on › Recession resilience & distribution growth outperformance vs traditional diversified REITs › Low correlation to traditional performance drivers behind retail, office & industrial sub-sectors Demand factors • Healthy in strong economy & resilie
Slide 53: Self Storage at a Glance (Continued)
SELF STORAGE AT A GLANCE (CONTINUED) Other key factors • Location, visibility & convenience = differentiators • Low ongoing capex – relationship between capex / NOI growth very attractive • Simple business … but sophisticated operator required • Bigger is better – spreads fixed costs & supports inte
Slide 54: Differentiators
DIFFERENTIATORS Lease-up vs. mature self storage assets • Lifecycle of asset – two distinct phases – ‘Lease-up’ & ‘Mature’ (c. 80% level) • Lease-up period anywhere between 3 & 5 years Lease-term • Average length of stay for existing customers – 21 months • Two distinct renter profiles: short-term (
Slide 55: Disclaimer & Confidentiality
DISCLAIMER & 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 or
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