Stor-Age listing on JSE brings a unique proposition

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Gavin Lucas, CEO of Stor-Age Property REIT (3rd from Left) prepares to sound the kudu horn at the JSE listing event. Gavin Lucas, CEO of Stor-Age Property REIT (3rd from Left) prepares to sound the kudu horn at the JSE listing event.

Stor-Age Property REIT becomes South Africa's first self storage property fund to list on the JSE's main board, bringing to the market a R1.3 billion portfolio of properties.

The company is following in the footsteps of international self-storage peers who have consistently outperformed the listed property sectors of the US, UK and Australia in recent years.

SA’s largest homebuilder, Balwin Properties recently debuted on the JSE. The Fund differs from other JSE-listed property entities and real estate investment trusts as its business strategy is to generate profits through the development of residential estates.

Investors now have access to a unique proposition on the local bourse of more than R600 billion real estate sector, boasting a different offering.

Stor-Age successfully debuted yesterday following a significantly oversubscribed pre-listing capital raise.

Given the pre-listing demand for the stock, its board upped the size of the capital raise. A total of R1.02 billion was raised compared with the initial target of R715m, primarily with selected institutional investors.

There are concerns that Stor-Age will not enjoy enough demand for its services to grow substantially. But CEO Gavin Lucas says he has timed his entry to the listed market and has the support of companies running similar but bigger operations abroad.

"The overwhelmingly positive response to our private placement affirms the strength of our business differentiators and prospects," Lucas said.

He explains that the lion’s share, or R907 million, of the capital raised would be used to reduce gearing to a loan-to-value level of about 10%. The remaining R112 million will be used to settle sale proceeds owing to partners, Growthpoint Properties Limited and Fairstore Trust.

The company provides self storage solutions across 32 properties, which are differentiated by their high visibility to passing traffic, easy access off busy arterial routes and proximity to middle to upper income suburbs.

Stor-Age opened at R9.89 and the share price rose as high as R9.99 marginally below its IPO offer price of R10 before closing at R9.91.

As much as 80% of its tenants are individuals or families looking to stow away their possessions, while the other 20% are small and medium enterprises, many of which store files and records. Lucas believes his company will be able to deliver growth returns to investors, saying the group has done extensive research into understanding its tenant base.

Analysts agree that it will be a good five years before a new competitor with well-located facilities would be able to start challenging Stor-Age.

Avior Capital equity analyst Adrian Jardine said the company dominated its niche of the property market and there were no competitors with better positioned storage facilities.

"Stor-Age is the best self-storage operator in SA, with its well-located sites, a healthy development pipeline and a far better product than its fragmented competition," said Mr Jardine.

Other property listings so far this year, include Indluplace Properties, UK-focused Capital & Regional, New Frontier Properties, Lodestone Properties, Balwin Properties and International Hotel Group.

Read more on:

Growthpoint Properties  |  Stor-Age Property REIT [JSE: SSS]  |  Johannesburg Stock Exchange (JSE)  |  Indluplace Properties  |  Balwin Properties Limited  |  New Frontier Properties  |  Gavin Lucas  |  Lodestone Properties  |  Adrian Jardine