introducing stor-age

Chairman’s letter

This, our second integrated annual report and first for a full 12-month trading period, reflects the company’s continued excellent financial performance since its listing. We achieved this despite a contracting domestic economy.

Stor-Age was the first self storage REIT to list on the JSE or, for that matter, in any emerging market. As a specialist asset class in the early stages of development, self storage offers unique growth prospects which the management team continues harnessing to deliver strong and sustainable growth in returns.

During the year, on all fronts – acquisitions, new store development, existing property expansions and portfolio management – management executed their mandate with discipline and focus and within the scope of the vision and growth strategy.

The executive team has built a track record of delivery since the business’ founding more than 10 years ago. The business model is based on global best practice and strong networks with leading first-world market peers, which is evidenced by more than a decade of successfully acquiring, developing, leasing and operating self storage assets.

timeline

The self storage sector’s resilient investment theme is evidenced by more than 50% of our tenants having stored with us for more than a year as at 31 March 2017. For customers who ended their leases during the year, the average length of stay was 14 months; for existing customers it is 21 months. For properties open more than five years, the average length of stay is 24 months.

Our investment property portfolio grew by R680 million to R2.050 billion, underpinned by a 46 500 m² increase in GLA. The growth in GLA was supported by the key strategic acquisition of Storage RSA (41 800 m² GLA) and the build-out in the existing portfolio by a further 4 700 m² GLA.

Given the economic environment, maintaining a strong balance sheet remains a key strategic pillar of the business. To this end, in February 2017 we were pleased to raise R400 million of equity capital to fund the Storage RSA acquisition and reduce associated debt.

Global markets

Self storage has an established track record in certain first-world markets, particularly in the US, but there are other developed countries where the industry is less mature. As management seeks to grow the fund, its opportunities are not limited to South Africa or even emerging markets. The same social and built-environment trends that are propelling self storage in South Africa are also at play in the UK, Europe and Australia, and the board continues encouraging management to deepen its networks in these markets where many of the self storage businesses are still privately owned.