{"id":577,"date":"2024-10-24T01:01:00","date_gmt":"2024-10-24T01:01:00","guid":{"rendered":"https:\/\/bluegemresearch.co.za\/?p=577"},"modified":"2024-12-13T13:13:17","modified_gmt":"2024-12-13T13:13:17","slug":"stor-age-property-reit-limited-initiation-of-coverage-good-store-of-capital","status":"publish","type":"post","link":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/?p=577","title":{"rendered":"Stor-Age Property REIT Limited \u2013 Initiation of Coverage \u2013 Good Stor(e) of Capital"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>Share Code: JSE: SSS \u2013 Market Cap: R7.2b \u2013 PE: 17.0x \u2013 DY: 7.9%<\/em><\/p>\n\n\n\n<div data-wp-interactive=\"core\/file\" class=\"wp-block-file\"><object data-wp-bind--hidden=\"!state.hasPdfPreview\" hidden class=\"wp-block-file__embed\" data=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/NOTE-Initiation-of-Coverage_Stor-Age-Prop-REIT-vREVISED-2.pdf\" type=\"application\/pdf\" style=\"width:100%;height:600px\" aria-label=\"Embed of &lt;strong&gt;Stor-Age Property REIT - Initiation of Coverage&lt;\/strong&gt;.\"><\/object><a id=\"wp-block-file--media-3c88c6be-bf53-4177-adf5-a6b28f545cd3\" href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/NOTE-Initiation-of-Coverage_Stor-Age-Prop-REIT-vREVISED-2.pdf\"><strong>Stor-Age Property REIT &#8211; Initiation of Coverage<\/strong><\/a><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/NOTE-Initiation-of-Coverage_Stor-Age-Prop-REIT-vREVISED-2.pdf\" class=\"wp-block-file__button wp-element-button\" download aria-describedby=\"wp-block-file--media-3c88c6be-bf53-4177-adf5-a6b28f545cd3\">Download<\/a><\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Business Overview:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Stor-Age is an integrated &amp; internally managed REIT that owns &amp; operates self-storage properties in South Africa and the United Kingdom<\/strong> with a portfolio comprising of 103 properties (60 in SA operate under <em>Stor-Age<\/em> brand &amp; 43 in the UK operate under the <em>Storage King<\/em> brand).<\/li>\n\n\n\n<li><strong>Stor-Age is the largest, market-dominant self-storage brand in SA whilst ranking 6<sup>th<\/sup> in the UK<\/strong> (the UK is an under-penetrated Developed Market based on self-storage space per capita versus other DMs).<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-full\"><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/2024-10-24-SSS.png\" target=\"_blank\" rel=\"noreferrer noopener\"><img loading=\"lazy\" decoding=\"async\" width=\"1009\" height=\"559\" src=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/2024-10-24-SSS.png\" alt=\"\" class=\"wp-image-578\" srcset=\"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/2024-10-24-SSS.png 1009w, https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/2024-10-24-SSS-300x166.png 300w, https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/2024-10-24-SSS-768x425.png 768w, https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/2024-10-24-SSS-624x346.png 624w\" sizes=\"auto, (max-width: 1009px) 100vw, 1009px\" \/><\/a><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Key Upsides &amp; Downsides:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The current interest rate-cutting cycle may lower finance costs, boost valuations &amp; increase the attractiveness of the property sector.<\/li>\n\n\n\n<li>Furthermore, <strong>Stor-Age has a highly defensive product<\/strong> (self-storage), and the share price has been resilient through economic downturns with an excellent track record of operating and dividend growth.<\/li>\n\n\n\n<li><strong>Self-storage has high barriers to entry<\/strong> that includes long lease-up periods for newly developed properties and limited available properties in high-density, visible urban nodes.<\/li>\n\n\n\n<li><strong>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.<\/strong><\/li>\n\n\n\n<li>Management has a pipeline of 13 properties that are expected to add 60,000m2 of GLA to its portfolio in the near term.<\/li>\n\n\n\n<li>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.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Forecast, Valuation and Implied Return:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>We see Stor-age as having a <strong>fair value of c.R15.50 per share<\/strong> 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.<\/li>\n\n\n\n<li>Rolling forward our fair value by 12 months at our Cost of Equity (less our expected dividend) gives us a <strong>12m TP of R15.97 per share<\/strong>, implying a total return of c.14% based on the current share price (R15.02).<\/li>\n\n\n\n<li><strong>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%.<\/strong><\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-file\"><a id=\"wp-block-file--media-9310fdf7-728a-4796-a265-52f9dd12264e\" href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/11\/NOTE-Initiation-of-Coverage_Stor-Age-Prop-REIT-vREVISED-2.pdf\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Stor-Age Property REIT &#8211; Initiation of Coverage<\/strong><\/a><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/11\/NOTE-Initiation-of-Coverage_Stor-Age-Prop-REIT-vREVISED-2.pdf\" class=\"wp-block-file__button wp-element-button\" download aria-describedby=\"wp-block-file--media-9310fdf7-728a-4796-a265-52f9dd12264e\">Download<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Share Code: JSE: SSS \u2013 Market Cap: R7.2b \u2013 PE: 17.0x \u2013 DY: 7.9% Business Overview: Key Upsides &amp; Downsides: Forecast, Valuation and Implied Return:<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[156],"tags":[13,15,60,157,16,159,160],"class_list":["post-577","post","type-post","status-publish","format-standard","hentry","category-stor_age_prop_reit","tag-equity-research","tag-jse","tag-research","tag-self-storage","tag-south-africa","tag-stor-age","tag-stor-age-property-reit"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/577","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=577"}],"version-history":[{"count":6,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/577\/revisions"}],"predecessor-version":[{"id":612,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/577\/revisions\/612"}],"wp:attachment":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=577"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=577"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=577"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}