Stor-age Property Reit Ltd. · JSE:SSS
Stor-age Property Reit — H1 FY2018 Earnings Presentation
45 slides from Stor-age Property Reit's earnings presentation, November 2017
Slide 1: Interim Results Presentation
STOR-AGE PROPERTY REIT INTERIM RESULTS PRESENTATION PERIOD ENDED 30 SEPTEMBER 2018
Slide 2: Presentation Outline
PRESENTATION OUTLINE Page Introduction 3 Financial review 9 Strategy 13 Property review 16 Operations review 23 Sales, marketing and the brand 30 Outlook 33 Annexures A. Trading environment – South Africa 35 B: Trading environment – UK 37 C: Share price performance 39 D: Income statement and earning
Slide 3: Introduction
INTRODUCTION STOR-AGE PROPERTY REIT LIMITED 3
Slide 4: Snapshot – November 2017
SNAPSHOT – NOVEMBER 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 R3.4 billion1 Total property value R3.6
Slide 5: Investment Case
INVESTMENT CASE • Dynamic self storage sector specialists, allowing for focused attention, delivering superior returns • Sector leader in South Africa and recent strategic entry into UK (top 10 operator) • Sophisticated operating platform and benefits of scale across both markets • UK management tea
Slide 6: Highlights
HIGHLIGHTS Interim distribution up 9.25% to 47.02 cps Closing rental rate R88 per m² – 10% growth (8.7% like-for-like) Occupied space increased by 41 200 m² (3 400 m² like-for-like) Investment property valued at R3.6 billion Conservative gearing of 13.9% – of which 85% of net debt hedged Major acqui
Slide 7: Key Metrics
KEY METRICS DISTRIBUTION RENTAL RATE OCCUPIED SPACE CPS PER M² M² Including Including 8.7% 3 400 m² like-for-like like-for-like 47.02 88.0 198 000 ↑ ↑ ↑ 9.25% 10% 41 200 m² 79.9 156 800 43.03 Sep 16 Sep 17 STOR-AGE PROPERTY REIT LIMITED 7
Slide 8: Key Metrics (continued)
KEY METRICS (CONTINUED) PORTFOLIO VALUE PROPERTIES TENANTS Rbn Number Number 3.6 23 000 48 ↑ ↑ ↑ 157% 100% 92% 24 12 000 1.4 2016 2017 2016 2017 2016 2017 Sep 16 Nov 17 STOR-AGE PROPERTY REIT LIMITED 8
Slide 9: Financial Review
FINANCIAL REVIEW STOR-AGE PROPERTY REIT LIMITED 9
Slide 10: Earnings and Distribution
EARNINGS AND DISTRIBUTION 6 Months 6 Months 6 Months 6 Months 30 Sep 2017 30 Sep 2017 30 Sep 2017 30 Sep 2016 Rm Rm Rm Rm • Like-for-like growth in rental income and net property operating income Like-for-like Acquisitions Total Total up 10.2% and 11.6%1 › rate growth of 8.7% and 1.5% Rental income
Slide 11: Balance Sheet – Summarised
BALANCE SHEET – SUMMARISED 30 Sep 30 Sep 30 Sep 30 Sep 2017 2016 2017 2016 Rm Rm Rm Rm ASSETS LIABILITIES Non-current assets Non-current liabilities Investment properties 2 112 1 394 Bank debt 300 133 Share purchase scheme loans 125 123 Finance lease 6 3 Intangible assets and goodwill 84 82 Non-curr
Slide 12: Capital Structure
CAPITAL STRUCTURE • 13.9% gearing at September 2017 • Conservative target gearing range 25% - 35% over medium to long term • R1.276bn equity capital raised in October 2017 to fund Storage King (UK) and StorTown acquisitions • R25m conserved in July 2017 as part of dividend reinvestment plan • Signif
Slide 13: Strategy
STRATEGY STOR-AGE PROPERTY REIT LIMITED 13
Slide 14: 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 Growth – acquisitions of quality assets, organic growth throug
Slide 15: Strategic Entry into UK Market
STRATEGIC ENTRY INTO UK MARKET • Sector growth in UK is positive, with increasing demand Resilient sector • Supply remains constrained – undersupply in comparison to more established US and Australian markets with strong growth • Average net rentals and occupancies across UK sector increasing attrac
Slide 16: Property Review
PROPERTY REVIEW STOR-AGE PROPERTY REIT LIMITED 16
Slide 17: Portfolio – November 2017
PORTFOLIO – NOVEMBER 2017 61 The listed portfolio comprises 48 properties: 35 in SA and 13 in the UK. Stor-Age has a further 13 properties in its Managed Portfolio (SA) – bringing the total properties to 61 SA LISTED PORTFOLIO: UK PORTFOLIO¹: 35 properties 13 properties c.R2.2bn c.R1.4bn c.257 000 m
Slide 18: Managed Portfolio
MANAGED PORTFOLIO • Branded and managed by Stor-Age • Stor-Age has pre-emptive right to acquire all properties • 13 properties, c. 76 800 m² GLA, c. R1bn (cost), 3 500 + tenants • Dominated by high profile ‘Big Box’ properties in outstanding locations • Randburg opened in July 2017, last property de
Slide 19: Storage King (UK)
STORAGE KING (UK) November 2017 • 13 properties c. 50 500 m² GLA (c. 53 600 m² on full fit-out) • Average occupancy of 78.9% • Average rental rate of £21.99 per sqf pa • 97.3% interest, management 2.7% interest Salient features • £53.3m (R943m) initial purchase price – funded via equity capital rais
Slide 20: Storage King (UK) (continued)
STORAGE KING (UK) (CONTINUED) Overview • 6th largest UK self storage brand • Operating 25 well-located properties throughout England: bias towards the South-East and East • Owns 13 properties – eight freehold and five leasehold¹, average 17 year unexpired lease-term • Crewe² property – finalising du
Slide 21: South Africa
SOUTH AFRICA Storage RSA – February 2017 • Rare market opportunity ito scale and quality – CT and JHB • 6 properties – c. 41 800 m² GLA, R475m • Bryanston development opportunity – town planning in hand • Successfully integrated • Trading performance in line with expectations Unit Self Storage – May
Slide 22: South Africa (continued)
SOUTH AFRICA (CONTINUED) Development – Bryanston • Certificate of Practical Completion (‘CPC’) deal with Stor-Age Property Holdings (‘SPH’) – July 2017 • Pre-stated strategy – ‘measured approach’ to new development risk profile • Strategic decision at listing to not grow existing Managed Portfolio •
Slide 23: Operations Review
OPERATIONS REVIEW STOR-AGE PROPERTY REIT LIMITED 23
Slide 24: Operations Platform
OPERATIONS PLATFORM Outstanding Operating Web, mobile platforms locations standards and social media Contact Innovative Centre marketing Recruitment, High quality purpose Revenue training and L&D built properties management STOR-AGE PROPERTY REIT LIMITED 24
Slide 25: Operations Platform (continued)
OPERATIONS PLATFORM (CONTINUED) High operating leverage • Highly sophisticated operations platform • Achieve organic growth through proactive management of rate and occupancy • Largely a fixed cost business – revenue growth = increased operating margins Revenue management • Right price, for the righ
Slide 26: Operations Platform (continued)
OPERATIONS PLATFORM (CONTINUED) Technology • Improving systems and automating processes = improved efficiency • Paperless process design • Invested in leading eLearning platform – May 2017 › 17 in-house courses designed › 680 + hours of online training completed Security • Reinforce awareness at pro
Slide 27: Our Customers
OUR CUSTOMERS FY2018: 1 600 + surveys¹ completed Net Promoter Score² 71 • ‘My Experience Surveys’ portal drives customer standards • Results and feedback drives Learning, Development and Training Programme • Net Promoter Score² (‘NPS’) › Based on global NPS standards, any score above 0 = good › An N
Slide 28: Our Customers (continued)
OUR CUSTOMERS (CONTINUED) GEOGRAPHIC RESPRESENTATION1 RESIDENTIAL / COMMERCIAL TENANT MIX BY GLA2 333 Gauteng 24 Western Cape Residential 50 Eastern Cape Commercial 41 KwaZulu Natal Free State 76 GEOGRAPHIC FOCUS RESIDENTIAL vs COMMERCIAL Primary focus = high profile locations Residential tenants ou
Slide 29: Our Customers (continued)
OUR CUSTOMERS (CONTINUED) AVERAGE LENGTH OF STAY1 REASON FOR STORING2 Business needs 17 14 18 < 6 months Excess stuff 29 4 6 - 12 months 2 Lifestyle choice 12 > 12 months Moving 19 2 - 3 years Marriage / divorce 21 21 > 3 years 2 Renovating 41 Other DEMAND PROFILE ‘NEEDS’ DRIVEN PRODUCT Two signific
Slide 30: Sales, Marketing and the Brand
SALES, MARKETING AND THE BRAND • Focus on location, visibility and quality of properties • Driving brand and product awareness • Positioned at quality end of market • Foundations of brand strategy › Big branding at properties in outstanding locations = high visibility › Focus on customer service and
Slide 31: Digital Marketing and E-Commerce
DIGITAL MARKETING AND E-COMMERCE • Focus on internet technology and digital marketing › Reach, engagement and conversion › Platform = strategic advantage › Complexity and cost of online sales = increased barrier to competition • Digital and online innovation and enhancements › New smartphone driven
Slide 32: Enquiry and Web Stats
ENQUIRY AND WEB STATS ENQUIRIES BY SOURCE¹ • Increasing focus on digital reinforced by switch to mobile 14 • Significant portion of web visits from people searching for Stor-Age Website › Total² Google visits 116 000 + 30 56 Telephone (c.60% arrived organically) Walk-ins › Lower cost of acquisition
Slide 33: Outlook
OUTLOOK • Focus on short and medium term strategic objectives – driving occupancy, revenue and cash flow = earnings and dividends growth • Growth profile of portfolio and earnings attractive • Conservative capital structure • Established, scalable operating platforms in SA and the UK • Challenging l
Slide 34: Annexures
A. Trading environment – South Africa ANNEXURES B. Trading environment – UK C. Share price performance D. Income statement and earnings reconciliation E. Schedule of properties F. Pipeline STOR-AGE PROPERTY REIT LIMITED 34
Slide 35: Trading Environment – South Africa
TRADING ENVIRONMENT – SOUTH AFRICA Annexure A Latest Comparative period period CPI % y-o-y (Sept 2017 vs Sept 2016) 5.1 6.1 GDP (Q2 2017 q-o-q growth) 2.5 3.1 FNB/BER Consumer Confidence Index (Q2 2017 vs Q2 2016) (9) (11) RMB/BER Business Confidence Index (Q3 2017 vs Q3 2016) 35 42 Source: Stats SA
Slide 36: Trading Environment – South Africa (continued)
TRADING ENVIRONMENT – SOUTH AFRICA (CONTINUED) Annexure A CPI INFLATION REAL GDP GROWTH RMB/BER BUSINESS CONFIDENCE INDEX FNB/BER CONSUMER CONFIDENCE INDEX STOR-AGE PROPERTY REIT LIMITED 36
Slide 37: Trading Environment – UK
TRADING ENVIRONMENT – UK Annexure B Latest Comparative period period CPIH % change y-o-y (Sep 2017 vs Sep 2016) 2.8 1.3 GDP (Q3 2017 q-o-q growth) 0.4 0.4 GfK Consumer Sentiment Index (Sept 2017 vs Sep 2016) (9) (1) CBI Business Optimism index (Q3 2017 vs Q3 2016) 5 (47) Source: Office for National
Slide 38: Trading Environment – UK (continued)
TRADING ENVIRONMENT – UK (CONTINUED) Annexure B UK GDP GROWTH RATE UK INFLATION RATE UK BUSINESS CONFIDENCE UK CONSUMER CONFIDENCE Source: Office for National Statistics, Tradingeconomics.com STOR-AGE PROPERTY REIT LIMITED 38
Slide 39: Share Price Performance
SHARE PRICE PERFORMANCE Annexure C Share price performance relative to SA Listed Property Index (since listing) Share performance R1.276 billion equity capital raised R400 million equity capital raised 111 million shares issued at R11.50 37 million shares issued at R10.81 2.5% discount to 30 day VWA
Slide 40: Income Statement and Earnings Reconciliation
INCOME STATEMENT AND EARNINGS RECONCILIATION Annexure D 30 Sep 30 Sep 30 Sep 30 Sep 2017 2016 2017 2016 Income statement R’000 R’000 R’000 R’000 Property revenue 114 710 78 526 Profit for the period 135 994 53 708 Rental income 110 106 75 573 Basic earnings 135 994 53 708 Other income 4 604 2 953 He
Slide 41: Schedule of Properties – Listed Portfolio
SCHEDULE OF PROPERTIES – LISTED PORTFOLIO Annexure E Store name Address Province STOR-AGE BOKSBURG 37 View Point Road, Bartlett, Boksburg, Johannesburg Gauteng STOR-AGE CONSTANTIA KLOOF Cnr of Hendrik Potgieter and 14th Avenue, Constantia Kloof, Johannesburg Gauteng STOR-AGE GARSFONTEIN Plot 13 Gars
Slide 42: Schedule of Properties – Listed Portfolio (continued)
SCHEDULE OF PROPERTIES – LISTED PORTFOLIO (CONTINUED) Annexure E Store name Address Province STOR-AGE OTTERY Cnr Bloemof Avenue and Springfield Street, Ottery Western Cape STORTOWN BRACKENHILL 127 Brackenhill Road, Hillcrest Kwa-Zulu Natal STORTOWN NGUNI WAY 1 Nguni Way, Hillcrest Kwa-Zulu Natal STO
Slide 43: Schedule of Properties – Managed Portfolio
SCHEDULE OF PROPERTIES – MANAGED PORTFOLIO Annexure E Store name Address Province STOR-AGE BROOKLYN Cnr of Jan Shoba & Justice Mohamed Street, Brooklyn, Pretoria Gauteng STOR-AGE IRENE Cnr of 40th Avenue & 24th Street, Irene, Pretoria Gauteng STOR-AGE MOOIKLOOF 738 Blesbok Street Pretoria East Gaute
Slide 44: Pipeline
PIPELINE Annexure F Total committed pipeline subject to town planning consent c. 32 000 m² Anticipated GLA Site Location City Status (m²) Prominent location on the corner of Main Under construction – scheduled to BRYANSTON JHB 6 100 and Vlok Roads open in July 2018 Highly visible location on Jan Smu
Slide 45: 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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