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Stor-Age Property REIT Limited
Incorporated in the Republic of South Africa
Registration number 2015/168454/06
Share Code: SSS ISIN: ZAE000208963
Approved as a REIT by the JSE
('Stor-Age', the 'group' or the 'Company')
TRADING UPDATE
Stor-Age, South Africa's leading and largest self storage property fund, is pleased to provide the following
trading update for the third quarter ended 31 December 2020.
Operating metrics
1. Occupancy summary
SA UK Total
31 December 2020
GLA m' 365 900 82 900 448 800
Occupied m' 326 700 72 600 399 300
Occupied % 89.3% 87.6% 89.0%
30 September 2020
GLA m' 365 800 82 800 448 600
Occupied m' 315 400 70 400 385 800
Occupied % 86.2% 85.0% 86.0%
31 March 2020
GLA m' 365 400 82 800 448 200
Occupied m' 310 400 65 300 375 700
Occupied % 85.0% 78.8% 83.8%
Increase in third quarter of FY21
Occupied m' 11 300 2 200 13 500
Occupied % 3.1% 2.6% 3.0%
Increase year-to-date of FY 21
Occupied m' 16 300 7 300 23 600
Occupied % 4.2% 8.8% 5.3%
2. Trading summary
SA UK Total
Quarter ended 31 December 2020
Move-ins 5 672 2 870 8 542
Like-for-like 5 672 2 314 7 986
Acquisitions - 556 556
Move-outs 4 586 2 609 7 195
Like-for-like 4 586 2 084 6 670
Acquisitions - 525 525
Net gain 1 086 261 1 347
2. Trading summary cont.
SA UK Total
Quarter ended 31 December 2019
Move-ins 5 154 1 902 7 056
Like-for-like 5 154 1 785 6 939
Acquisitions - 117 117
Move-outs 4 740 2 146 6 886
Like-for-like 4 740 2 045 6 785
Acquisitions - 101 101
Net gain/(loss) 414 (244) 170
% change move-ins (excl. acquisitions) 10.1% 29.6% 15.1%
% change move-outs (excl. acquisitions) (3.2)% 1.9% (1.7)%
3. Closing average rental rate
SA UK
At 31 December 2020 R110.5/m' #21.36/sqf
Increase in third quarter 2.0% 0.7%
Annualised increase 8.0% 2.6%
SA ' South Africa
UK ' United Kingdom
m' ' square metres
sqf ' square foot
GLA ' gross lettable area
Acquisitions ' relates to Flexi portfolio acquired in December 2019
Like-for-like ' refers to all trading properties excluding the acquisition of Flexi portfolio
UK rental rate quoted on an annual basis
The results for the third quarter have again demonstrated self storage to be an exceptionally resilient business
with the positive momentum in occupancy and enquiries continuing into the three-month period to 31
December 2020. Closing occupancy increased by 3.0% in the quarter to finish at 89.0% with occupied space
increasing by 13 500m' over the period. The year-to-date occupancy gain for the nine-month period ended 31
December 2020 was 23 600m' (5.3% increase).
Enquiries for the third quarter increased by 22% and 40% year-on-year in SA and the UK respectively driving
a significant increase in move-in activity. Move-ins in SA increased by 10.1% year-on-year which, together
with a decrease of 3.2% in move-outs compared to the prior year, resulted in an occupancy gain of 11 300m'
in the quarter. In the UK, move-ins increased by 29.6% year-on-year (excluding acquisitions) with move-outs
significantly lower than expected. This translated into a net gain of 2 200m' for the quarter compared to an
occupancy loss of 1 300m' in the prior year.
The closing average rental rate increased by 2.0% (annualised 8.0%) and 0.7% (annualised 2.6%) in the third
quarter for SA and the UK respectively. This growth reflects the resumption of price increases for existing
customers whilst higher occupancy levels and strong demand allowed us to increase rental rates for new
customers at certain properties. Our pricing strategy has not resulted in any significant move-out activity in
either market.
We collected approximately 96% and 98% of rentals due in SA and the UK respectively in the quarter. In SA
we collected over R4.6 million of rental due which arose prior to 1 October 2020. In the UK, cash collections
remain in line with pre-Covid-19 levels.
Our customers use the product on a short and long-term basis throughout various economic cycles. 'Life-
changing events' continue to be the primary driver of demand for self storage. These events (such as death,
separation, downsizing, emigration and population mobility), which gave rise to demand before the onset of
the pandemic, continue to take place.
The economic disruption and dislocation caused by Covid-19 has also given rise to pandemic-related
movement and demand. Work-from-home, housing market activity, migration, disruption to businesses and
the transitory nature of employment are a few examples of the additional demand driving growth in the sector.
When job losses occur and workers face increasing economic insecurity, mobility tends to increase as people
relocate for better economic prospects or more affordable living situations. These transitioning households
tend to increase demand for self storage, a dynamic well-demonstrated during the ongoing pandemic.
Awareness of the product and its benefits has increased significantly since the onset of the pandemic and is
evidenced by the significant increase in enquiries. The fallout from Covid-19 has demonstrated that self storage
is a solution for the need from consumers and businesses to temporarily and safely store their possessions in
a time of dislocation, uncertainty and change. This has resulted in more people being exposed to the product.
In both markets, we are well placed to benefit from the increased demand arising from the current environment.
In the UK, housing market sales plunged during the lockdown and surged in a sharp V-shaped recovery as
restrictions were eased. This increased transaction activity, driven by pent-up demand and the temporary
reduction in stamp duty for property purchases under #500 000, provided a positive impact for the self storage
sector with sales concluded in the UK summer being completed in the traditionally slower winter months.
We also continue to see growth in the commercial segment of our customer base. In dealing with the crisis,
many SMME businesses have had to temporarily close, shut down completely, adapt to social distancing
requirements or relocate and seek flexibility in their space requirements. This continues to drive demand for
the product.
In our interim results presentation (17 November 2020) we announced that we had entered into an exploratory
relationship with Picup, a logistics software company providing last mile delivery solutions with crowd-sourced
drivers. Picup typically provides its services to third-party logistics service providers which, in turn, are
commissioned to execute the fulfilment leg for online retailers. Many of our properties in SA's main cities are
located in areas where a significant level of e-commerce deliveries take place. A pilot last-mile delivery hub
was launched at our Craighall property, in partnership with Picup, to cater for up to 500 parcels a day. The
results to date are encouraging and we remain excited by our differentiated last mile strategy and the revenue
prospects of using our properties as micro fulfilment centres.
The expected lengthy vaccine distribution period means that pandemic-related demand may continue for the
remainder of 2021 and possibly longer. Whilst some of the additional demand described above may be
permanent in nature, we do not have perfect visibility as to how these socio-economic and structural changes
will affect self storage or customer behaviour in the long run. That said, our sophisticated operating platform
allows us to analyse changes in customer behaviour across a range of metrics in real time and to adapt our
customer acquisition strategy in response to these changes.
SA development activity
We made good progress in the quarter with our developments at Sunningdale, Tygervalley and Cresta. The
first phases of GLA at Sunningdale and Tygervalley are expected to be ready for trading in April 2021. Cresta
is scheduled to open in September 2021. On full fit-out the three properties will add approximately 21 000m'
of GLA to the portfolio.
We are continuing with the planning, design and value-engineering on properties in our development pipeline
and will provide updates as and when there is further progress. We continue to monitor all new development
projects to ensure that they meet our risk-adjusted yield expectations.
UK JV with Moorfield
In September 2020, the group entered into a JV with Moorfield Group to develop a portfolio of self storage
properties, focused on London and the South East of England, with an initial value of #50 million and the
potential to increase to #100 million. Stor-Age has a 24.9% equity interest in the JV.
Moorfield is a leading UK real estate fund manager with a 25-year track record of investing across most real
estate sectors. The group will earn management fees for acquiring, developing and managing properties in
the JV and will have a pre-emptive right to acquire all newly developed properties subject to certain
performance criteria.
During the quarter the JV secured two properties, one of which is located in a prime position on a busy arterial
road within the M25 orbital motorway in Greater London and the other in a busy big box retail corridor in a
large conurbation in the South East of England. Both properties have been secured subject to final planning
consent with favourable pre-application responses received from the local authorities.
Outlook
The reintroduction of lockdowns and stricter measures in both markets has created further uncertainty and has
given rise to additional risk in the macro environment. Despite the uncertainty, we benefit from a high-quality
property portfolio, conservative capital structure and deep sector specialisation. The defensive and resilient
nature of our business model, as well as the scale and depth of our operating model and industry-leading
platform, means we are well-placed to navigate any challenges that may arise.
Cape Town
25 January 2021
Sponsor
Investec Bank Limited
Date: 25-01-2021 09:00:00
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