Newly listed Stor-Age offers compelling investment case

A property punters may be less familiar with self-storage as an asset class than their US counterparts are. But judging by the positive response to this week’s listing of Stor-Age, the JSE’s first niche owner and operator of selfstorage facilities, the sector clearly offers a compelling investment case for income chasers looking for an alternative to office, retail or industrialfocused real estate offerings. The prelisting placement was significantly oversubscribed, prompting Stor-Age to increase its capital raising target from R820m to R1,02bn.

Shares worth more than R3,8m traded in the first 30 minutes of listing. That’s quite an achievement for a small-cap (market cap of R1,4bn) listing, considering how many new and existing property counters are clamouring for investor support.

“We like the Stor-Age strategy and management team,” says Stanlib’s head of listed property funds, Keillen Ndlovu. “It brings something new and refreshing to the JSE and operates in a less competitive environment than funds exposed to the wellestablished retail, office and industrial sectors. Assets are not as easy to replicate, given that they have to be close to where people live, and it is difficult to acquire land in such areas.” He says the 8% forward yield at which Stor-Age listed, with forecast dividend growth of around 10%/year, is attractive, compared to a yield of less than 7% and expected growth of 6%-8%/year for the property sector .

Stor-Age was founded 10 years ago by Cape Town-based chartered accountants Gavin Lucas and Steven Horten. They built their first self-storage facility in 2006. Today the company owns a R1,3bn portfolio of 24 storage parks located near middle- to upper-income residential areas in Cape Town, Johannesburg, Pretoria and Durban. It has a pipeline of another 19 selfstorage facilities (eight of which are already built), which could be added to the portfolio within the next two to four years.

mullerj@fm.co.za

Get commercial property news by email

Free alerts when we publish — pick a focus or get everything, unsubscribe in one click. Subscribe »