Tag Archives: Stor-Age Property REIT

Stor-Age Property REIT Limited – FY 26 Results – Tough UK Market but with Room to Grow

Share Code: SSS – Market Cap: R8.8bn – P/B: 0.9x – DY: 6.6%

Stor-Age Property REIT – Results Note – FY 26Download

Summary of Results: South Africa does the heavy lifting

  • Stor-Age’s FY 26 landed in line with our forecast as Distributable Earnings rose +8.4% to R642.4m and Distributable Income per Share growing by +5.1% to 129.29cps. Final DPS rose +5.1% to 116.36cps (maintaining the REIT’s 90% payout).
  • The Group’s balanced sheet remained comfortable, gearing at reasonable-to-low levels (Loan-to-Value or LTV at 27.1%, or at 30.3% on a Look-through basis including JV’s), and the NAV per share growing at +3.7% to 1767cps.
  • Digging deeper, the Group’s South African segment carried the result with its rental income growing +10.5%, net property operating income +11.1%, and same-store rate +8.6%).
  • UK segment lagged with GBP rental income growth of only +1.1% eaten by operating costs growing +4.5% resulting in Net Property Operating Income slipping -0.8%.

Thoughts: UK Should See Better FY 27E

  • Despite the UK miss above, we think that FY 26 was a quality results in a two-speed year with a tougher H2:26.
  • There will be new UK leadership from October 2026 that has sparked an operational review here and should see efficiencies and pricing gains (probably really annualising from H2:27E).
  • AI-driven efficiencies should help medium-term UK margins while AI-pricing transparency in the UK could help the Group’s SA operations (many local operators may not have the AI know-how that the Group is gaining in the competitive UK market).
  • Finally, we will be watching some financing rolls where low-struck hedges (70% of net debt, ~1.3-year average expiry) roll off and potentially reprice higher during FY 27E.

Updated Forecast and Valuation: Double-digit Implied Total Return

  • We update our fair value based on our blended fair value of 1812cps (previously 1850cps) and a 12m TP of 1908cps (previously 1970cps).
  • With the share at 1715cps (it has de-rated since the R500m December raise), the implied 12m total return improves to 18% (previously 16%) — about 11% price return plus a 7.1% Forward Yield.

Stor-Age Share Price relative to Self-Storage Peers:

Stor-Age Property REIT – Results Note – FY 26Download

Stor-Age Property REIT Limited – FY 25 Results – Steady Performance

Share Code: SSS – Market Cap: R7.5bn – P/B: 0.9x – DY: 7%

Stor-Age REIT – FY 25 – Results NoteDownload

FY 25 Results & Thoughts: Well Run, Well Positioned & Globally Competitive

  • Stor-Age owns a well-managed, growing self-storage property portfolio that was built out of a strong SA-base (that remains robust and growing) and is increasingly allocating capital towards the UK (offering Rand Hedge benefits) while cleverly leveraging the capital-light policy of JV funding structures to build out what will likely become a substantial portfolio.
  • FY 25 rental income growth has been strong, historically outpacing inflation; SA achieving +10.2% and the UK +6.5% in the period. FY 25 occupancies remain high in owned properties—exceeding 90% in South Africa and around 84% in the UK—while JV properties are still in their lease-up period with occupancies around 74% in SA (FY24: 65%) and 63% in the UK (FY24: 57%).
  • The Group’s Net Property Operating Income (NPOI) margin has consistently been around 74% since FY19. A 65% EBITDA margin remains strong and underpinned by solid cash flows with a history of distributing nearly all distributable earnings as dividends. The Group did recently shift its distribution policy from 100% to 90~95% of distributable income—retaining some capital for growth—thus, FY 25’s payout ratio is 90%.
  • Distributable income rose 4% in FY25 and management has indicated a 5% to 6% expected increase for FY26, which we think may prove to be slightly conservative (our forecast is fractionally above the high-end of this range).
  • Net Asset Value (NAV) per share increased by 5.6% in FY25 (c. 7% per year for the past four years). We note that the Rand/Pound exchange rate has been very stable over the past two financial years. Theoretically, the Rand should depreciate against the Pound by the annual inflation differential. Should this revert to the theory, there will be upside when and as the Pound assets and earnings are converted to Rand earnings & distributions.
  • We consider the Group’s balance sheet comfortably/lowly geared though comparable international peers do have somewhat lower average gearing.

Valuation and 12m TP: Relative Model and Dividend Discount Model Used

  • Stor-Age’s share price has not kept pace with its NAV growth, leading to a Price/Book (“PB”) ratio of 0.8-0.9x. The Group’s quality, its potential for both Rand Hedge benefits from its UK portfolio, optionality from organic and acquisitive growth informs our view that the share should (at least) track its historic 1.0x PB over time.
  • Stor-Age’s share price has not kept pace with its NAV growth, leading to a Price/Book (“PB”) ratio of 0.8~0.9x. The Group’s quality, its potential for both Rand Hedge benefits from its UK portfolio, optionality from organic and acquisitive growth informs our view that the share should (at least) track its historic 1.0x PB over time.
  • We determined the fair value for Stor-Age by using a Relative Valuation Model and a Dividend Discount Model (31 March 2025):
    • Relative Value: Our fair value is R16.71 per share,
    • Dividend Discount Model: Our fair value is R16.71 per share, &
    • Equal-weighted average valuation: R16.71 per share.
  • Rolling this fair value forward, we arrive at a 12m Target Price—factoring in dividends—of R17.80 (Previously: R17.10); we expect this to generate a 12m return of c.19% at the 30 June 2025 share price of R15.95.
Stor-Age REIT – FY 25 – Results NoteDownload

Stor-Age Property REIT Limited – Initiation of Coverage – Good Stor(e) of Capital

Share Code: JSE: SSS – Market Cap: R7.2b – PE: 17.0x – DY: 7.9%

Stor-Age Property REIT – Initiation of CoverageDownload

Business Overview:

  • Stor-Age is an integrated & internally managed REIT that owns & operates self-storage properties in South Africa and the United Kingdom with a portfolio comprising of 103 properties (60 in SA operate under Stor-Age brand & 43 in the UK operate under the Storage King brand).
  • Stor-Age is the largest, market-dominant self-storage brand in SA whilst ranking 6th in the UK (the UK is an under-penetrated Developed Market based on self-storage space per capita versus other DMs).

Key Upsides & Downsides:

  • The current interest rate-cutting cycle may lower finance costs, boost valuations & increase the attractiveness of the property sector.
  • Furthermore, Stor-Age has a highly defensive product (self-storage), and the share price has been resilient through economic downturns with an excellent track record of operating and dividend growth.
  • Self-storage has high barriers to entry that includes long lease-up periods for newly developed properties and limited available properties in high-density, visible urban nodes.
  • The Group has a fast-growing, high-margin income stream of management fees from third-party property management and digital marketing platform that offer its shareholders exciting optionality.
  • Management has a pipeline of 13 properties that are expected to add 60,000m2 of GLA to its portfolio in the near term.
  • Management has decided to decrease its distributable income payout ratio from 100% to a more sustainable 90~95%, thus resulting in some downward pressure on short-term distributions per share despite expected growth in forecast distributable income.

Forecast, Valuation and Implied Return:

  • We see Stor-age as having a fair value of c.R15.50 per share based on a blended average of a discounted cash flow valuation (R15.92) and relative valuation model (R15.08); the latter is based on the valuation multiples of comparable listed self-storage peer companies.
  • Rolling forward our fair value by 12 months at our Cost of Equity (less our expected dividend) gives us a 12m TP of R15.97 per share, implying a total return of c.14% based on the current share price (R15.02).
  • We see a c.14% total return in the stock as comprising a forecast price return of c.6% and forecast dividend yield of c.8%.
Stor-Age Property REIT – Initiation of CoverageDownload