EPaper

Stor-Age CEO on pipeline in SA

DENISE MHLANGA mhlangad@businesslive.co.za

Stor-Age has grown its portfolio from R1.3bn at its listing in 2015 to R9.26bn now. CEO Gavin Lucas sat down with Business Day to unpack the nuances of its business and the development pipeline in SA and the UK.

Stor-Age, a fastgrowing self-storage company which listed on the JSE in 2015 with a portfolio valued at R1.3bn, has grown in portfolio value in 6.5 years to R9.26bn in SA and the UK.

The company is SA’s only specialist self-storage real estate investment trust (Reit) on the JSE. It is differentiated by its quality properties located in high visibility to passing traffic, easy access off busy arterial routes, and proximity to middleto upper-income suburbs.

Stor-Age has 85 properties in SA cities including in Johannesburg, Cape Town, Pretoria and Durban (55), and 30 properties in the UK’s main cities and towns, as well as 14 properties in the development pipeline. It also owns the sixthlargest UK self-storage brand, Storage King, which represents more than 50% of the group’s property assets by value.

CEO Gavin Lucas sat down with Business Day to unpack the nuances of the business and the development pipeline in SA and the UK.

How did Stor-Age come into being?

In 2005 my partner and I — both of us chartered accountants and executive directors — founded the business and opened the first property in 2006 in Cape Town. My dad was a builder and we leveraged his skill set when we built the first property. Little did we know at the time that 15 years later we would become self-storage sector specialists operating in the UK. We are passionate nerds who eat, sleep and drink self-storage.

When we listed in 2015, Stor-Age was the first of its kind alternative real estate investment trust, and we envisaged it would take about five years for the investment community to understand our product. While we think the market has some understanding of our unique product, we believe there are nuances about the business that differentiate us from the crowd. Our product is space rented on a short-term basis.

In SA and the UK we have 45,000 tenants, and probably more than 10% of those tenants are either moving out or taking occupation of storage space every month. Through our platforms in SA and the UK, we generate about 10,000 inquiries. Who are your tenants? About 70% of our user base are people like you and me in their personal capacity. Lifechanging events such as changing jobs and moving into another location, renovations or moving in with family and friends, result in some people needing self-storage facilities. We’ve found that people with household income of up to R12,000 per month value their household items that even when they move in with family or friends where there is little space, self-storage is the safe place for their valuables.

The balance of demand comes from the commercial sector, and primarily, small, medium and micro-size enterprises who tend to rent out bigger unit sizes compared to our residential users.

Our tenants move their own goods and have keys to rented storage space, and the goods are under their custody. They have access to their space when they need to, hence the reason we are located close to where people and businesses operate.

Tell us about the growth of the business in the last 6.5 years

Self-storage is a niche growth sector globally that’s driven by societal trends such as life-changing events and growth in e-commerce. The pandemic has accelerated these trends and this has further increased demand for our product. Whether the economy is booming or contracting, selfstorage is a very resilient product.

Stor-Age has consistently delivered on its growth strategy. From listing with 24 properties, we now have 85 assets with 14 in the pipeline. Stor-Age has consistently outperformed the listed property index and SA Reits since listing in 2015, and outperforming by 192%.

For the year ended March 2022, our occupancy levels in both markets exceeded 88% and we’ve consistently grown and maintained high occupancies on the same store basis since listing.

Stor-Age is one of 11 publicly traded self-storage Reits globally, and the only one in the emerging markets. We continue to see good prospects for growing our business in both markets.

How will you fund the development pipeline?

We have a significant development [pipeline] and our balance sheet is strong. During the financial year we raised R575m in capital. Of these projects, 10 are in SA, which demonstrates our commitment to continue developing our business, and it talks to the opportunities that we still see. We will grow through both equity, acquiring existing selfstorage properties, as well as developing new ones.

In SA, the development cost is R900m. We continue to expand in the UK with 10% of our portfolio size completed or under construction.

WHETHER THE ECONOMY IS BOOMING OR CONTRACTING, SELF-STORAGE IS A VERY RESILIENT PRODUCT

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2022-06-24T07:00:00.0000000Z

2022-06-24T07:00:00.0000000Z

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