This company saw demand for its business increase during Covid-19
Stor-Age Property REIT, the largest self storage property fund and brand in South Africa, said Tuesday (17 November), that it delivered a strong performance for the six month period ended September 2020, despite the disruption of the Covid-19 lockdowns.
“Our specialist sector skills and experience, continued innovation in our digital platform, and unrelenting focus on servicing our customers especially in a time of crisis, enabled Stor-Age to recover from the initial setback of the lockdowns and curtailment of economic activity,” it said.
The group portfolio closed at 86% occupancy, with an increase of over 10,300 square metres year-on-year (like-for-like) basis underpinned by resilient organic growth and strong demand.
Like-for-like revenue, excluding the impact of acquisitions, increased by 6.1% and 2.8% year-on-year in SA and the UK respectively. “In the period, we collected 96% and 98% of rentals due in SA and the UK respectively,” the company said.
Total property revenue increased by 18.1% to R390.8 million (2019 :R330.8 million) including organic growth, the impact of acquisitions, and foreign exchange movements. Rental income for the period was R354.9 million (2019: R292.7 million), a year-on-year increase of 21.3%.
Financial highlights
- Interim dividend 52.00 cents (2019: 54.89 cents);
- Rental income and net property operating income up 21.3% and 13.3% respectively;
- Like-for-like rental income up 6.1% SA;
- Portfolio occupancy up 26,100 sqm (SA 11,500 sqm; UK 14,600 sqm);
- Total occupancy of 86.0% (SA – 86.2%; UK – 85.0%);
- Like-for-like occupancy growth of 10,300 sqm (SA – 8,800 sqm; UK – 1,500 sqm);
- Investment property value up 18.1% to R7.3 billion.
The Stor-Age portfolio comprises 71 self storage properties across both SA (50) and the UK (21). The SA portfolio is valued at R4.5 billion and the UK portfolio – under the brand Storage King – at R2.8 billion.
Soon after the respective national lockdowns commenced in SA and the UK, Stor-Age said it activated a fully online e-sign capability for new leases allowing for a contactless digital sign-up and move-in process.
“During lockdown, our properties remained accessible to customers in both SA and the UK as we continued to support the provision of essential services. To further support the communities in which Stor-Age operates, we offered complimentary storage space to several relief and government-based entities.
“As expected, we immediately saw a drop in activity as soon as the lockdowns commenced, resulting in a decrease in occupancy in April and May in both markets. As lockdown restrictions eased, our primary focus was improving enquiry generation and driving move-in activity to increase occupancy,” the group said.
By the end of May, enquiry levels returned to pre-Covid-19 levels and for the full period, SA and UK enquiries were 14% and 19% ahead, respectively, of the prior year period on a like-for-like basis.
It said that the economic disruption and dislocation caused by the pandemic manifested in “life-changing events”, which are a primary driver of demand for self storage.
“In particular, many SMME businesses have had to shut down, temporarily close, relocate or seek flexibility in their space requirements. This continues to drive demand for the product in the commercial segment and, in both markets, we are well placed to benefit from this increased demand,” Stor-Age said.
Following the easing of lockdown restrictions, Stor-Age said that enquiries and demand increased steadily resulting in a 10,000 sqm increase in occupancy for the period. As the occupancy growth occurred predominantly in the second half of the period, the positive impact of the increase in occupancy is not fully reflected in earnings.
In October 2020, group occupancy increased by a further 3,300 sqm. “In SA we selectively increased promotions to drive occupancy growth but for the second half of the 2021 financial year, we expect promotions to be in line with pre-crisis levels.”
Looking ahead, Stor-Age said that the pandemic will result in socio-economic shifts and long-term structural changes to the economy and business in general.
“Whilst we are encouraged by our operating performance and remain cautiously optimistic around opportunities that may arise from these changes, it remains difficult to accurately predict the full impact of the Covid-19 crisis on our business.”
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