Stor-age Property Reit Ltd. · JSE:SSS
Stor-age Property Reit — FY2019 Earnings Presentation
63 slides from Stor-age Property Reit's earnings presentation, March 2019
Slide 1: Annual Results Presentation
STOR-AGE PROPERTY REIT ANNUAL RESULTS PRESENTATION YEAR ENDED 31 MARCH 2019 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 36 Outlook 44 STOR-AGE PROPERTY REIT LIMITED 2
Slide 3: Annexures
ANNEXURES Page A: Trading environment – South Africa 46 B: Trading environment – UK 48 C: Schedule of properties 50 D: Pipeline 53 E: Our customers 54 F: Valuation methodology 57 G: Self storage 101 58 H: The market 59 I: Self storage at a glance 60 J: Differentiators 62 STOR-AGE PROPERTY REIT LIMIT
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, EU1: 1, Aus: 1, SA: 1) Market R5.4 billion capitalisation Total South Africa United Kingdom
Slide 6: Investment Case
INVESTMENT CASE Attractive sector Niche asset class uncorrelated to traditional drivers of property and recession-resilient SA and UK platforms: Leading sector specialists Dynamic specialists, allowing for focused attention, delivering superior returns; management teams with considerable operations
Slide 7: Performance
PERFORMANCE Share performance and liquidity 18 month performance: Strong Share price performance relative to SA Listed Property Index (SAPI) relative to SAPI 150 45 140 40 Number of shares (Millions) 130 35 120 30 March 2019 Indexed price September 2018 R585m equity raise, 110 R400m equity raise, 25
Slide 8: Financial Review
FINANCIAL REVIEW STOR-AGE STOR-AGE PROPERTY PROPERTY REITLIMITED REIT LIMITED 8
Slide 9: Financial Highlights
FINANCIAL HIGHLIGHTS Total distribution up 9.05% to 106.68 cps Rental income up 63.2%, including SA rental income up 7.5% on a like-for-like basis SA closing rental rate up 9.3% Strong operational performance in UK – net property operating income up 6.3% on a like-for-like basis Occupied space up 88
Slide 10: Distributions
DISTRIBUTIONS 106.68 cps Distribution per share full year 97.83 cps 60 full year 55.38 88.05 cps full year 51.30 50.81 50 47.02 ↑ 45.01 43.04 9.05% 2019 Full year Cents per share 40 ↑ ↑ N1 11.1% 9.1% 2018 2019 30.07 Full year Interim 30 ↑ ↑ 10% 9.25% 2017 2018 Full year Interim 20 10 0 2016 2017 201
Slide 11: Trading Results
TRADING RESULTS 31 March 2019 31 March 2018 % Variance SA UK Total SA UK Total SA UK Total Rm Rm Rm Rm Rm Rm Property revenue 329.2 192.0 521.2 241.4 68.8 310.2 36% 179% 68% Rental income 310.0 172.1 482.1 233.7 61.7 295.4 33% 179% 63% Ancillary income 9.2 19.9 29.1 6.7 7.1 13.8 36% 181% 110% Rental
Slide 12: Distribution Analysis
DISTRIBUTION ANALYSIS 31 Mar 2019 31 Mar 2018 Rm Rm Net property operating income 385.3 233.3 Management fees 11.0 22.1 Administration expenses (43.8) (36.9) Interest expense (81.8) (33.1) Interest income 19.0 13.0 Earnings before items listed below 289.7 198.4 Net CCIRS 30.0 10.6 FX gains – unreali
Slide 13: Balance Sheet – Summarised
BALANCE SHEET – SUMMARISED 31 Mar 31 Mar 31 Mar 31 Mar 2019 2018 2019 2018 Rm Rm Rm Rm ASSETS LIABILITIES Non-current assets Non-current liabilities Investment properties 6 029 3 853 Bank debt 1 742 642 SA 3 999 2 490 SA 916 236 UK freehold 1 834 1 190 UK 826 406 UK leasehold¹ 196 173 Derivatives ma
Slide 14: Capital Structure
CAPITAL STRUCTURE 31 Mar 19 31 Mar 18 SA UK Total SA UK Total Total debt facilities (Rm) 1 645 981 2 626 995 406 1 401 Undrawn debt facilities (Rm) 431 155 586 642 - 642 Gross debt (Rm) 1 214 826 2 040 353 406 759 Net debt (Rm) 688 795 1 483 228 392 620 Investment property (Rm) 3 999 2 030 6 029 2 4
Slide 15: Currency Hedging
CURRENCY HEDGING HEDGING OF NET INVESTMENT IN STORAGE KING 31 Mar 2019 31 March 2018 GBP m GBP m Investment property 107.6 75.3 Bank debt (43.8) (24.5) Non-current assets 0.9 1.6 Net working capital 0.6 0.1 Net foreign denominated assets 65.3 52.5 Nominal value of currency hedging instruments – cros
Slide 16: Currency Hedging (continued)
CURRENCY HEDGING (continued) HEDGING OF GBP EARNINGS Six month period ended Hedging level Forward rate Mar 19 100% R22.30 Sep 19 100% R22.68 Mar 201 100% R28.19 Sep 20 75% R20.76 Mar 21 75% R21.41 Sep 21 50% R21.80 Mar 22 50% R22.49 Hedging policy based on projected forward GBP earnings 12 13-24 25-
Slide 17: Strategy
STRATEGY STOR-AGE STOR-AGE PROPERTY PROPERTY REITLIMITED REIT LIMITED 17
Slide 18: Strategy
STRATEGY Deep product understanding, outstanding real estate expertise, excellent operations platform Sector specialists and digital marketing capability, established global peer networks Highly strategic In planning and execution at both macro and micro level Acquisition of quality assets, organic
Slide 19: Strategic Entry into UK Market
STRATEGIC ENTRY INTO UK MARKET • Sector growth in UK is positive, with increasing demand • Supply constrained – undersupply in comparison to more established US and Australian Resilient sector with strong markets growth opportunities • Revenue and occupancies across UK sector increasing attractively
Slide 20: Property Review
PROPERTY REVIEW STOR-AGE STOR-AGE PROPERTY PROPERTY REITLIMITED REIT LIMITED 20
Slide 21: Portfolio Overview
PORTFOLIO OVERVIEW 65 The portfolio comprises 49 properties in SA and 16 properties in the UK SA PORTFOLIO UK PORTFOLIO1 49 properties 16 properties R4.0bn R2.0bn 357 600m² GLA 66 100m² GLA 24 000 + tenants 8 000 + tenants Pretoria Johannesburg Bloemfontein 49 Durban 16 Cape Town Port Elizabeth 1. A
Slide 22: Portfolio Analysis
PORTFOLIO ANALYSIS Total number of Total property value Total number of tenants Total GLA properties R6.0bn 32 000 + 423 700m2 65 Value of properties Number of tenants GLA Number of properties 16% 33% 25% 25% 75% 84% 75% 67% South Africa UK STOR-AGE PROPERTY REIT LIMITED 22
Slide 23: Transaction Activity Since Listing
TRANSACTION ACTIVITY SINCE LISTING Nov 2015 2016 Feb 2017 Mar 2017 May 2017 Portfolio: Managed Acquisition: Major Acquisition: 32 properties Portfolio: extensions: Sunninghill, Berea Storage RSA – Gardens and Unit Self Storage and Gillooly’s 7 properties Durbanville (single asset) opened (6 trading,
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 • New acquisition/development sites and date secured › CT – Site 1: December 2017 – Site 2: September 2018 – Site
Slide 25: Case Study: Bryanston – Completed Development
CASE STUDY: BRYANSTON – COMPLETED DEVELOPMENT Project Overview › Erf size 5 127m² › Total development cost c. R100m (saving of c. R1m) › Zoning Special › Opened September 2018 › GBA 8 128m² › Current occupancy 48% of full fit-out (2 900m² leased up in 7 months) › GLA 6 100m² › Current rental rate ac
Slide 26: Case Study: Craighall – Current Development
CASE STUDY: CRAIGHALL – CURRENT DEVELOPMENT Project Overview › Erf size 2 393m² › Development cost R116m › Zoning Special › Opening August 2019 › GBA 9 046m² › Project timeline 15 months › GLA 6 650m² › Rezoning period 18 months STOR-AGE PROPERTY REIT LIMITED 26
Slide 27: Case Study: Tygervalley – Current Development
CASE STUDY: TYGERVALLEY – CURRENT DEVELOPMENT Project Overview › Erf size 2 537m² › Development cost R90m › Zoning Special › Starting on site June 2019 › GBA 10 150m² › Project timeline 15 months › GLA 7 500m² › Rezoning period 11 months STOR-AGE PROPERTY REIT LIMITED 27
Slide 28: Environmental Sustainability
ENVIRONMENTAL SUSTAINABILITY Our properties benefit from a low environmental impact with minimal utility usage Renewable energy – Solar PV Phase 2 of our Solar PV programme to roll out during FY2020: • Phase 1 4 properties • Phase 2 16 properties • Total system size 670KW Springfield • Total investm
Slide 29: Energy Generation Capability
ENERGY GENERATION CAPABILITY 45 of our 49 properties are fitted with generators In the event of an outage, power is seamlessly generated to support the following systems at our stores: › on site operating system and server › telephone lines and internet connectivity › access control and security sys
Slide 30: Overview of UK Self Storage Industry
OVERVIEW OF UK SELF STORAGE INDUSTRY Occupancy rate on current 1 582 77.2% lettable area 76.1% 77.2 Occupancy levels (based on the amount of space Self storage properties, Occupancy on 73.1% 73.9% offering approximately current lettable 70.2% currently available to 68.7% customers) continue to 45.6m
Slide 31: Overview of UK Self Storage Industry (continued)
OVERVIEW OF UK SELF STORAGE INDUSTRY (continued) Source: The Self Storage Association UK annual industry report, 2019 STOR-AGE PROPERTY REIT LIMITED 31
Slide 32: Storage King (UK)
STORAGE KING (UK) Overview Portfolio • 6th largest UK self storage brand • Well-located, with a bias towards South East and East • Operating 28¹ properties throughout England • Properties 16 • Highly scalable, well invested infrastructure and • GLA² c.680 000 sqf experienced management • GLA on full
Slide 33: Storage King (UK) (continued)
STORAGE KING (UK) (continued) Performance • Strong operating performance to March 2019 • Net property operating income up 6.3% LFL1 • Occupancy increased by 8 400m² y-o-y, including LFL growth of 1 300m² • Closing occupancy of 80.3%, up 2.1% • Closing rental rate of £21.63, up 0.8% Operations • Inte
Slide 34: 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 35: UK – Acquisitions
UK – ACQUISITIONS Viking Self Storage – Bedford The Storage Pod – Weybridge • Acquisition date March 2019 • Acquisition date March 2019 • Acquisition price1 £12.3m / R229.6m • Acquisition price1 £11.50m / R215.3m • GLA 48 000 sqf / 4 500m2 • GLA 42 800 sqf / 4 000m2 • MLA 54 000 sqf / 5 000m2 • MLA
Slide 36: Operations Review
OPERATIONS REVIEW STOR-AGE STOR-AGE PROPERTY PROPERTY REITLIMITED REIT LIMITED 36
Slide 37: Platform Overview
PLATFORM OVERVIEW STOR-AGE PROPERTY REIT LIMITED 37
Slide 38: 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 39: Platform Driven by Data
PLATFORM DRIVEN BY DATA STOR-AGE PROPERTY REIT LIMITED 39
Slide 40: Contact Centre
CONTACT CENTRE Bespoke Customer Relationship Management (CRM) 52 000 + 15 000 + platform launched in Contact Centre in September 2018 Calls answered in Online enquiries Centralisation benefits the year responded to • Real time data driven decision-making • Standardisation • Quality control • Directi
Slide 41: Digital Marketing
DIGITAL MARKETING Highly skilled, specialised and scalable Key platforms Paid Website UX • Search engine visibility is a key • Google, YouTube, • Search – Ads, Display – • Building for mobile – tighter differentiator Facebook, Instagram, GDN, Remarketing framing, brighter footage, LinkedIn • Accredi
Slide 42: Google – The Dream Team of Targeting
GOOGLE – THE DREAM TEAM OF TARGETING Driving store visits through the best of Google local formats: Maps Business profile Display Search YouTube Approved Affinity + Approved Affinity + Custom Intent Life Events Consumer Patterns In-Market In-Market Audiences • Right message, right time, right audien
Slide 43: Data and Technology – Quick Facts
DATA AND TECHNOLOGY – QUICK FACTS 593 900 + 13.2m + 37 900 + 260 + c. R8.5m Web page views Ad impressions Organic website Google Digital marketing enquiries campaigns spend GOOGLE + c. 13 800 436 000 + 82 800 + 92 850 + FACEBOOK Key word bids Unique website Conversions – Partner certified Facebook f
Slide 44: Outlook
OUTLOOK • Focus on short and medium term strategic objectives – driving occupancy, revenue and cash flow = earnings and dividends growth • Emphasis on active, hands-on management and disciplined operational focus at an individual property level in FY2020 • Growth profile of portfolio and earnings at
Slide 45: Annexures
A. Trading environment – South Africa ANNEXURES B. Trading environment – UK G. Self storage 101 H. The market C. Schedule of properties I. Self storage at a glance D. Pipeline J. Differentiators E. Our customers F. Valuation methodology STOR-AGE STOR-AGE PROPERTY PROPERTY REITLIMITED REIT LIMITED 45
Slide 46: Trading Environment – South Africa
TRADING ENVIRONMENT – SOUTH AFRICA Annexure A Mar Mar 2019 2018 CPI % y-o-y 4.5 3.8 GDP (3.2%) (2.7%) FNB/BER Consumer Confidence Index 2 26 RMB/BER Business Confidence Index 28 44 Source: Factset • Political and economic uncertainty continued to constrain the South African economy during the year •
Slide 47: Trading Environment – South Africa (continued)
Gross % Y-o-y % change - - 2 4 6 8 10 20 30 40 50 60 10 12 Jun-09 Jan-07 Nov-09 Aug-07 May-10 Mar-08 Nov-10 Oct-08 May-11 Jun-09 Source: Factset and Sharenet Nov-11 Jan-10 May-12 Aug-10 Oct-12 Apr-11 Apr-13 Nov-11 Oct-13 Jun-12 Apr-14 Feb-13 INFLATION Oct-14 Sep-13 Apr-15 Apr-14 Oct-15 Dec-14 Mar-16
Slide 48: Trading Environment – UK
TRADING ENVIRONMENT – UK Annexure B Latest Comparative period period CPIH % (H1 2019 vs H1 2018 y-o-y growth) 1.9 2.5 GDP 1.8 1.2 GfK Consumer Sentiment Index (10) (7) CBI Business Optimism index (23) 13 Source: Factset • Political and economic uncertainty relating to the outcome of Brexit continues
Slide 49: Trading Environment – UK (continued)
Gross % Y-o-y % change - - 1 2 3 4 5 6 (1) 20 40 (80) (60) (40) (20) Jan-08 Mar-08 Jun-08 Sep-08 Nov-08 Apr-09 Apr-09 Sep-09 Nov-09 Feb-10 Jun-10 Jul-10 Source: Factset and Sharenet Dec-10 Jan-11 May-11 Aug-11 Oct-11 Mar-12 Mar-12 Aug-12 Oct-12 Jan-13 May-13 Jun-13 Oct-13 INFLATION Dec-13 Mar-14 Jul
Slide 50: Schedule of Properties – Listed Portfolio
SCHEDULE OF PROPERTIES – LISTED PORTFOLIO Annexure C 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 51: Schedule of Properties – Listed Portfolio
SCHEDULE OF PROPERTIES – LISTED PORTFOLIO Annexure C (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 52: Schedule of Properties – Listed Portfolio
SCHEDULE OF PROPERTIES – LISTED PORTFOLIO Annexure C (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 53: Pipeline
PIPELINE Annexure D Total committed pipeline subject to town planning consent c. 60 000m² + Anticipated Site Location City Status GLA (m²) Highly visible location alongside the Virgin Town planning approved; BRYANSTON JHB 4 800 Active Gym at the Grosvenor Crossing development planning underway Highl
Slide 54: Our Customers
OUR CUSTOMERS Annexure E GEOGRAPHIC REPRESENTATION1 RESIDENTIAL / COMMERCIAL TENANT MIX BY GLA2 Gauteng Residential 25 23 35 Western Cape Commercial Eastern Cape 2 KwaZulu Natal 11 Free State 3 United Kingdom 77 25 GEOGRAPHIC FOCUS RESIDENTIAL vs COMMERCIAL Primary focus = high profile locations Res
Slide 55: Our Customers – South Africa
OUR CUSTOMERS – SOUTH AFRICA Annexure E AVERAGE LENGTH OF STAY REASON FOR STORING Business needs 9 19 19 Excess stuff < 6 months 14 31 6 - 12 months Lifestyle choice 12 > 12 months Moving 21 2 - 3 years Marriage / divorce 21 17 > 3 years 44 Renovating 2 Other DEMAND PROFILE ‘NEEDS’ DRIVEN PRODUCT Tw
Slide 56: Our Customers – UK
OUR CUSTOMERS – UK Annexure E AVERAGE LENGTH OF STAY 25 < 6 months 31 6 - 12 months > 12 months 10 2 - 3 years 15 > 3 years 19 DEMAND PROFILE Two significant user groups need the product for short stays due to ‘life changing events’ (< 6 months 31%) and those requiring longer term space (1 year + 54
Slide 57: Valuation Methodology
VALUATION METHODOLOGY Annexure F • 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 58: Self Storage 101
SELF STORAGE 101 Annexure G About self storage Demand drivers • Storage space for personal and business use • Awareness and acceptance of self storage as an • ‘You lock – you keep the key’ option is vitally important = prerequisite • Various unit sizes ranging from 3 to 30m2 • Socio-economic factors
Slide 59: The Market
THE MARKET Annexure H 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 Europe average supply per capita
Slide 60: Self Storage at a Glance
SELF STORAGE AT A GLANCE Annexure I Investment case • Premised on › Recession resilience and distribution growth outperformance vs traditional diversified REITs › Low correlation to traditional performance drivers behind retail, office and industrial sub-sectors Demand factors • Healthy in strong ec
Slide 61: Self Storage at a Glance (continued)
SELF STORAGE AT A GLANCE (continued) Annexure I Other key factors • Location, visibility and convenience = differentiators • Low ongoing capex – relationship between capex/NOI growth very attractive • Simple business … but sophisticated operator required • Bigger is better – spreads fixed costs and
Slide 62: Differentiators
DIFFERENTIATORS Annexure J Lease-up vs. Mature self storage assets • Lifecycle of asset – two distinct phases – ‘Lease-up’ and ‘Mature’ (c. 80% level) • Lease-up period anywhere between 3 and 5 years Lease-term • Average length of stay for existing customers – 22 months (all properties) • Average le
Slide 63: 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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