Our opinion on the current state of STOR-AGE(SSS)Storage (SSS) is the JSE's only real estate investment trust (REIT) which specialises in buying and running domestic storage facilities in all major South African cities and in the UK. Its business is split about 60% in South Africa and 40% in the UK. It expects its UK business to exceed the South African business in due course.
The company owns 103 properties worth R17,3bn. The business of Stor-age tends to do well in recession as well as in boom periods of the economy. The average client keeps his storage unit for 2 years. The client base is widely diversified and very stable from a statistical point of view. The company's foray into the UK demonstrates its ability to find appropriate properties and add them to its portfolio. It also gives the share a rand-hedge element.
In its results for the six months to 30th September 2024 the company reported distributable income up 3,5% and rental income up 10,8% in South Africa. The company's loan-to-value (LTV) was 31,3% and headline earnings per share (HEPS) increased by 174%. The company said, "We expect our SA portfolio to continue its positive growth trajectory for the remainder of the financial year and we remain cautiously optimistic that our UK portfolio will deliver a robust set of results for the full financial year."
We believe that this is one of the best property investments available on the JSE. It offers a steady growth and minimal risk. Technically the share was rising steadily until April 2022 then it began a downward trend which ended in October 2023. Now moving up again, this share represents a potential buying opportunity in our opinion.
On 13th May 2024 the company announced that it had entered into a 3rd party agreement with Hines to manage their self-storage business in the UK.
