Stor-age Property Reit Ltd. · JSE:SSS
Stor-age Property Reit — H1 FY2019 Earnings Presentation
56 slides from Stor-age Property Reit's earnings presentation, November 2018
Slide 1: Interim Results Presentation
STOR-AGE PROPERTY REIT INTERIM RESULTS PRESENTATION PERIOD ENDED 30 SEPTEMBER 2018 STOR-AGE PROPERTY REIT LIMITED 1
Slide 2: Presentation Outline
PRESENTATION OUTLINE Page Introduction 4 Financial review 8 Strategy 17 Property review 20 Operations review 33 Outlook 41 STOR-AGE PROPERTY REIT LIMITED 2
Slide 3: Annexures
ANNEXURES Page A: Trading environment – South Africa 43 B: Trading environment – UK 45 C: Income statement and earnings reconciliation 47 D: Schedule of properties 48 E: Pipeline 51 F: Our customers 52 G: Valuation methodology 55 STOR-AGE PROPERTY REIT LIMITED 3
Slide 4: Introduction
INTRODUCTION STOR-AGE STOR-AGE PROPERTY PROPERTY REITLIMITED REIT LIMITED 4
Slide 5: Snapshot
SNAPSHOT Listing date November 2015 JSE sector Speciality REITs Profile Highly specialised, low risk, income paying self storage REIT Self storage 10 publicly traded self storage REITs universe (US: 5, UK: 2, EU4: 1, Aus: 1, SA: 1) Market R4.3 billion1 capitalisation Total South Africa United Kingdo
Slide 6: Investment Case
INVESTMENT CASE Attractive sector Niche asset class uncorrelated to traditional drivers of property – recession-resilient Dynamic specialists, allowing for focused attention, delivering superior returns; Leading sector specialists 2017 – strategically entered UK: scalable platform opportunity and ma
Slide 7: Performance
PERFORMANCE 12 month Share performance and liquidity performance: Strong relative Share price performance relative to SA Listed Property Index (SAPI) to SAPI R1.276 billion equity raise, 2.5% discounta to 30 day VWAP R400 million 140 45 equity raise, 3.46% R400 million equity discount to 130 a disco
Slide 8: Financial Review
FINANCIAL REVIEW STOR-AGE STOR-AGE PROPERTY PROPERTY REITLIMITED REIT LIMITED 8
Slide 9: Financial Highlights
FINANCIAL HIGHLIGHTS Interim distribution up 9.1% to 51.30 cps Rental income up 93%, including 9.4% like-for-like Net property operating income up 88%, including 9.8% like-for-like Strong performance in UK – closing occupancy and average rental rate up 3.0% and 1.6% since March 2018 (6 months) Occup
Slide 10: Distributions
DISTRIBUTIONS Forecast: 106.68 – 107.61 cps Distribution per share full year 97.83 cps 60 full year 55.38 – 56.31 88.05 cps full year 51.30 50.81 50 47.02 ↑ 45.01 43.04 9% - 10% 2019 FY Forecast Cents per share 40 ↑ ↑ N1 11.1% 9.1% 2018 2019 30.07 Full year Interim 30 ↑ ↑ 10% 9.25% 2017 2018 Full ye
Slide 11: Analysis of Core Earnings
ANALYSIS OF CORE EARNINGS 30 Sep 2018 30 Sep 2017 % Variance SA UK Total SA SA Total Rm Rm Rm Rm Property revenue 132.9 92.9 225.8 113.7 17% 99% SA earnings: • Rental income up 9.4% LFL² (rental rate 8.7% Rental income 129.3 83.1 212.4 110.1 and occupancy 0.7%) Ancillary income 3.6 9.8 13.4 3.6 • Di
Slide 12: Profit for the Period and Distribution Analysis
PROFIT FOR THE PERIOD AND DISTRIBUTION ANALYSIS 30 Sep 2018 30 Sep 2017 Rm Rm Profit for the period Core earnings 146.9 79.4 FV adjustment to derivatives financial instruments (33.0) 58.3 Depreciation and amortisation (2.2) (0.9) Other - 0.4 Profit before tax 111.7 137.2 Taxation 0.5 (1.2) Profit fo
Slide 13: Balance Sheet – Summarised
BALANCE SHEET – SUMMARISED 30 Sep 31 Mar 30 Sep 31 Mar 2018 2018 2018 2018 Rm Rm Rm Rm ASSETS LIABILITIES Non-current assets Non-current liabilities Investment properties 4 194 3 853 Bank debt 787 642 SA 2 668 2 490 SA 340 236 UK freehold 1 331 1 190 UK 447 406 UK leasehold¹ 195 173 Derivatives mark
Slide 14: Capital Structure
CAPITAL STRUCTURE 15 Nov 2018¹ 30 Sep 2018 SA UK Total SA UK Total Total debt facilities (Rm) 1 645 691 2 336 995 447 1 442 Undrawn debt facilities (Rm) 521 240 761 611 - 611 Gross debt (Rm) 1 124 452 1 576 384 447 831 Net debt (Rm) 1 099 409 1 508 332 405 737 Investment property (Rm) 3 783 1 532 5
Slide 15: Currency Hedging
CURRENCY HEDGING HEDGING OF NET INVESTMENT IN STORAGE KING 30 Sep 2018 31 March 2018 GBP m GBP m Investment property 75.8 75.3 Bank debt (24.3) (24.5) Non-current assets 1.4 1.6 Net working capital 1.7 0.1 Net foreign denominated assets 54.6 52.5 Nominal value of currency hedging instruments – cross
Slide 16: Currency Hedging (continued)
CURRENCY HEDGING (continued) HEDGING OF GBP EARNINGS Six month period ended Hedging level FEC value (m) Forward rate Sep 18 85 - 90% £2.021 R21.20 Existing Mar 19 85 - 90% £2.291 R22.47 FECs as at Sep 19 85 - 90% £2.371 R23.01 31 March 2018 Mar 20 85 - 90% £2.433 R29.02 Sep 20 65% - 75% £2.250 R20.7
Slide 17: Strategy
STRATEGY STOR-AGE STOR-AGE PROPERTY PROPERTY REITLIMITED REIT LIMITED 17
Slide 18: Strategy
STRATEGY Sector specialists – with deep product understanding and established global peer networks Outstanding locations Highly strategic – in planning and execution at both macro and micro level High quality Growth – acquisition of quality assets, organic growth through improved operational propert
Slide 19: Strategic Entry into UK Market
STRATEGIC ENTRY INTO UK MARKET • Sector growth in UK is positive, with increasing demand Resilient sector • Supply constrained – undersupply in comparison to more established US and Australian markets with strong growth • Average net rentals and occupancies across UK sector increasing attractively o
Slide 20: Property Review
PROPERTY REVIEW STOR-AGE STOR-AGE PROPERTY PROPERTY REITLIMITED REIT LIMITED 20
Slide 21: Portfolio Overview
PORTFOLIO OVERVIEW 63 The portfolio comprises 49 properties in SA and 14 properties in the UK SA PORTFOLIO¹ UK PORTFOLIO 49 properties 14 properties c.R3.8bn c.R1.5bn c.357 000 m² c.57 000 m² c.23 800 tenants c.6 800 tenants Pretoria Johannesburg Bloemfontein 49 Durban 14 Cape Town Port Elizabeth 1.
Slide 22: Portfolio Analysis
PORTFOLIO ANALYSIS Total property value (Rbn) 5 300 Total number of tenants 30 600 + Total GLA (m²) 414 000 Total number of properties 63 Value of properties Number of tenants GLA 14% 22% 28% 72% 78% 86% South Africa UK * Includes Managed Portfolio – acquired post period end, 9 October 2018 STOR-AGE
Slide 23: Transaction Activity Since Listing
TRANSACTION ACTIVITY SINCE LISTING Nov Feb Mar May 2016 2015 2017 2017 2017 Portfolio: Managed Acquisition: Major extensions: Acquisition: 32 properties Portfolio: Storage RSA – Gardens and Unit Self Storage – Sunninghill, 7 properties Durbanville 1 property CT Berea and (6 trading, 1 development si
Slide 24: South Africa
SOUTH AFRICA Acquisitions • All-Store – CT, R52m, acquired April 2018 • Managed Portfolio › CT, JHB, PTA, DBN, PE › 12 properties › Portfolio value R1.12 billion › Acquired October 2018 (post period end) • New acquisition/development sites and date secured › CT – Site 1: December 2017 – Site 2: Apri
Slide 25: Managed Portfolio Acquisition
MANAGED PORTFOLIO ACQUISITION Salient features Prime locations • Exceptional and rare opportunity • Prime locations • Multi-property self storage portfolio, dominated by high profile “Big-Box” properties • Concentrated in CT, JHB, DBN and PTA Berea Brooklyn Claremont • 12 properties • GLA of c. 86 3
Slide 26: Case Study: StorTown – Recent Acquisition
CASE STUDY: STORTOWN – RECENT ACQUISITION Salient Features Mount Edgecombe • Strategic regional acquisition – November 2017 Glen Anil • Acquisition price R145 million • GLA 22 187m² across 4 properties • Locations Waterfall › Durban City (CBD) Nguni Way › Glen Anil (Durban North) Springfield › Water
Slide 27: Case Study: Bryanston – Completed Development
CASE STUDY: BRYANSTON – COMPLETED DEVELOPMENT Project overview › Erf size 5 127m² › Development cost c. R80.9m › Zoning Special (saving of c. R1m) › GBA 8 128m² › Opened September 2018 › GLA 6 100m² › Current occupancy 21% STOR-AGE PROPERTY REIT LIMITED 27
Slide 28: Case Study: Craighall – Current Development
CASE STUDY: CRAIGHALL – CURRENT DEVELOPMENT Project overview › Erf size 2 393m² › Development cost R116m › Zoning Special › Opening mid-2019 › GBA 9 046m² › Project timeline 15 months › GLA 6 651m² › Rezoning period 18 months STOR-AGE PROPERTY REIT LIMITED 28
Slide 29: Overview of UK Self Storage Industry
OVERVIEW OF UK SELF STORAGE INDUSTRY THE UK MARKET PRESENTS A STRONG GROWTH OPPORTUNITY 1 505 76.1% 8.8% self storage properties, offering Occupancy on y-o-y increase in approximately 44.6 million sqf of space current lettable space total space occupied 29 600 sqf 44.6 m sqf 2.4 m sqf 30% Properties
Slide 30: Storage King (UK)
STORAGE KING (UK) Overview • 6th largest UK self storage brand • Operating 26 properties throughout England • Highly scalable, well invested infrastructure and experienced management • Long-established relationships with independent operators = opportunity Portfolio • Well-located, with a bias towar
Slide 31: Storage King (UK) (continued)
STORAGE KING (UK) (continued) Performance • Strong operating performance to September 2018 • Occupancy increased by 4 000m² y-o-y, including LFL growth of 1 300m² • Closing occupancy of 81.2%, up 3.0% since March 2018 (6 months) • Average rental rate of £21.46, up 1.6% since March 2018 (6 months) Op
Slide 32: UK Property Strategy
UK PROPERTY STRATEGY Aligned to current 5Y property strategy ending 2020 • Growth target – c. 3 to 5 properties pa • Highly strategic – 6 geographical target areas • Combination of acquisitions and new developments • Supply threshold – 1 sqf per capita outside M25, 3 sqf per capita inside M25 Acquis
Slide 33: Operations Review
OPERATIONS REVIEW STOR-AGE STOR-AGE PROPERTY PROPERTY REITLIMITED REIT LIMITED 33
Slide 34: Platform Overview
PLATFORM OVERVIEW STOR-AGE PROPERTY REIT LIMITED 34
Slide 35: Platform Advantage
PLATFORM ADVANTAGE Digital opportunity • Customer experience = new currency – opportunity to differentiate our product • Customer journey presents opportunity to be highly personalised • Digitally engaged business, with digital solutions and processes throughout • Embracing modern solutions – cloud,
Slide 36: Platform Advantage (continued)
PLATFORM ADVANTAGE (CONTINUED) STOR-AGE PROPERTY REIT LIMITED 36
Slide 37: Customer Acquisition Strategy
CUSTOMER ACQUISITION STRATEGY STOR-AGE PROPERTY REIT LIMITED 37
Slide 38: Contact Centre
CONTACT CENTRE Bespoke Customer Relationship Management (“CRM”) platform launched in Contact Centre in September 2018. Centralisation benefits • Real time data driven decision-making • Standardisation • Quality control • Directing online marketing efforts • Pricing optimisation • Targeted promotions
Slide 39: Digital Marketing
DIGITAL MARKETING Highly skilled, specialised and scalable • Accredited digital marketing agency – Google Partner • Significant capability › Strategic advantage › Effectively an in-house agency › Specialists – organic, paid, social media Key platforms • Google, YouTube, Facebook, Instagram • Google
Slide 40: Data and Technology – Quick Facts
DATA AND TECHNOLOGY – QUICK FACTS (2018FY) 335 000 + 11 m + 118 000 + 100 + c. R2m Web page views Ad impressions Organic website Google Digital marketing enquiries campaigns spend c. 8 000 235 000 + 37 000 + GOOGLE 88 000 + Key word bids Unique website Conversions – Partner certified Facebook follow
Slide 41: 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 42: Annexures
A. Trading environment – South Africa ANNEXURES B. Trading environment – UK C. Income statement and earnings reconciliation D. Schedule of properties E. Pipeline F. Our customers G. Valuation methodology STOR-AGE STOR-AGE PROPERTY PROPERTY REITLIMITED REIT LIMITED 42
Slide 43: Trading Environment – South Africa
TRADING ENVIRONMENT – SOUTH AFRICA Annexure A Latest Comparative period period CPI % y-o-y 4.9 5.1 GDP (0.7) (2.9) FNB/BER Consumer Confidence Index 22 (9) RMB/BER Business Confidence Index 38 35 Source: Stats SA, BER • Political and economic uncertainty continued to constrain the South African econ
Slide 44: Trading Environment – South Africa (continued)
TRADING ENVIRONMENT – SOUTH AFRICA (CONTINUED) Annexure A CPI INFLATION REAL GDP GROWTH 8 6 7 4 6 2 y-oy % change y-o-y % change 5 0 4 -2 3 -4 2 1 -6 0 -8 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 BUSINESS CONFIDENCE INDEX CONSUMER CONFIDENCE INDEX 140 15 120 10
Slide 45: Trading Environment – UK
TRADING ENVIRONMENT – UK Annexure B Latest Comparative period period CPIH % (H1 2018 vs H1 2017 y-o-y growth) 2.7 2.8 GDP 1.1 1.9 GfK Consumer Sentiment Index (9) (9) CBI Business Optimism index (3) 5 Source: Office for National Statistics, Tradingeconomics.com, GFK, OECD • Political and economic un
Slide 46: Trading Environment – UK (continued)
TRADING ENVIRONMENT – UK (CONTINUED) Annexure B INFLATION REAL GDP GROWTH 4 1.5 3 1.0 3 0.5 2 0.0 2 -0.5 1 -1.0 1 -1.5 0 -2.0 -1 -2.5 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 BUSINESS CONFIDENCE INDEX CONSUMER CONFIDENCE INDEX 40 10 5 20 0 0 -5 -10 -20 -15 -20
Slide 47: Income Statement and Earnings Reconciliation
INCOME STATEMENT AND EARNINGS RECONCILIATION Annexure C 30 Sep 30 Sep 30 Sep 30 Sep 2018 2017 2018 2017 Income statement R’000 R’000 R’000 R’000 Property revenue 225 769 114 710 Profit for the period (shareholders of parent) 111 121 135 994 Rental income 212 371 110 106 Basic earnings 111 121 135 99
Slide 48: Schedule of Properties – Listed Portfolio
SCHEDULE OF PROPERTIES – LISTED PORTFOLIO Annexure D Store name (SA) 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
Slide 49: Schedule of Properties – Listed Portfolio (continued)
SCHEDULE OF PROPERTIES – LISTED PORTFOLIO Annexure D (CONTINUED) Store name (SA) Address Province STORAGE RSA CONSTANTIA KLOOF 17 JG Strydom Drive, Constantia Kloof, Johannesburg Gauteng STORAGE RSA STELLENBOSCH 7 George Blake Street and 6 Stoffel Smit Street, Stellenbosch Western Cape STORAGE RSA D
Slide 50: Schedule of Properties – Listed Portfolio (continued)
SCHEDULE OF PROPERTIES – LISTED PORTFOLIO Annexure D (CONTINUED) Store name (UK) Address Area STORAGE KING AYLESFORD Unit 2 and 3, New Hythe Business Park, Bellingham Way, Aylesford, ME20 7HP South East STORAGE KING BASILDON Unit 1, Carnival Close, Basildon, SS14 3WN East STORAGE KING CAMBRIDGE 505
Slide 51: Pipeline
PIPELINE Annexure E Total committed pipeline subject to town planning consent c. 70 500m² Anticipated Site Location City Status GLA (m²) Highly visible location on Jan Smuts Avenue Under construction - scheduled to open mid CRAIGHALL JHB 6 700 near Hyde Park Corner Shopping Centre 2019 Visible locat
Slide 52: Our Customers
OUR CUSTOMERS Annexure F GEOGRAPHIC REPRESENTATION1 RESIDENTIAL / COMMERCIAL TENANT MIX BY GLA2 Gauteng Residential 24 26 Western Cape Commercial 36 Eastern Cape 2 KwaZulu Natal 10 Free State 3 United Kingdom 74 25 GEOGRAPHIC FOCUS RESIDENTIAL vs COMMERCIAL Primary focus = high profile locations Res
Slide 53: Our Customers – South Africa
OUR CUSTOMERS – SOUTH AFRICA Annexure F AVERAGE LENGTH OF STAY REASON FOR STORING Business needs 9 19 < 6 months 4 19 Excess stuff 29 2 6 - 12 months Lifestyle choice 11 > 12 months Moving 21 2 - 3 years Marriage / divorce 22 19 > 3 years 43 Renovating 2 Other DEMAND PROFILE ‘NEEDS’ DRIVEN PRODUCT T
Slide 54: Our Customers – UK
OUR CUSTOMERS – UK Annexure F AVERAGE LENGTH OF STAY REASON FOR STORING Business needs 6 < 6 months 8 17 Excess stuff 28 29 2 6 - 12 months Lifestyle choice > 12 months 16 Moving 10 2 - 3 years Marriage / divorce 15 8 > 3 years 43 Renovating 18 Other DEMAND PROFILE ‘NEEDS’ DRIVEN PRODUCT Two signifi
Slide 55: Valuation Methodology
VALUATION METHODOLOGY Annexure G • 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 and capitalisation rate › Terminal value • Income capital
Slide 56: 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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