Our business
Growth strategy
Stor-Age has a clearly defined strategy to grow the portfolio and enhance performance and investor returns by:
extracting organic growth through active revenue management, developing additional GLA and optimising the unit mix at the properties
leveraging our tenant management software platform to unlock value and drive cost efficiencies
pursuing acquisitions in a fragmented industry and consolidating our position as the leading and largest self storage brand in the South African market
actively managing and growing licensing, asset management and operator fee income from the development and ongoing management of the Managed Portfolio and pipeline
managing financial risk through prudent capital management policies
Growth Plan
We conduct our strategic growth planning in five year cycles. We are currently in the first year of our second five year cycle. Over the course of the last year we undertook four major research projects to assist us in developing our strategy, focused on four critical areas: supply levels; anticipated demand; customer profiling; and consumer demographics – the latter specifically to understand the emergence of the black middle class and its positive impact on the consumer profile.
The plan is centred on both developing new properties and acquiring existing self storage facilities.
Based on our research we believe there is sufficient demand to develop a 60+ property portfolio across South Africa’s major cities. This is on the basis of there being no further significant deterioration in the economic outlook over the medium term.
The strategy seeks to further entrench Stor-Age as the market leader and largest self storage property fund and brand in South Africa:
- Largest store footprint
- Quality stores – high profile locations, urban and urban edge
- Visible, convenient and accessible
- Setting the standard for modern urban self storage development
DEVELOPING AND ACQUIRING PROPERTIES
New developments
Stor-Age develops investment grade self storage properties in visible, convenient and accessible locations where there are favourable demographics and where suitable acquisitions are not available. The decision is based on the cost of development versus the cost of acquisition, the demographic market analysis and the existence of barriers to entry. Our model for rolling out new properties is well developed with clearly defined key success criteria.
Barriers to entry and defensive nature
The barriers to new supply in key target nodes in the main metropolitan cities are significant. In the South African market, there is little to no stock of premium grade self storage assets in prime urban and suburban nodes (population density and average household income is key), given that historically the industry has been characterised by operations located in industrial type areas or on the urban edge, where planning ordinances allow for self storage as an alternate land use.
Town planning presents a major challenge with long lead times required to gain planning consents. This in addition to the long lease-up period required to reach stabilised occupancy at new stores is a significant barrier to entry and contributes to the defensive nature of the portfolio.
Acquisitions of existing self storage properties
Due to a lack of supply of high quality self storage properties in desirable locations outside of Stor-Age, we do not anticipate that acquisitions will play a key role in the growth of the portfolio in the short term. However, we will pursue opportunities should they offer value to the business.
