Our opinion on the current state of SSS

Nov 15, 2023

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 74 properties worth R4,7bn in SA and R2,9bn in the UK. 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 2023 the company reported property revenue up 16,9% and headline earnings per share (HEPS) down 30,6%. The occupancy was at 89,1% and the company's net asset value (NAV) increased 7,2% to 1558c per share. The loan-to-value (LTV) was 31,9% and the company said, "Six new properties (four in SA and two in the UK) completed in our JV structures and commenced trading - Completed the £82.0 million acquisition of the four-property Easistore portfolio in the UK through a JV with Nuveen Real Estate where Stor-Age holds a 10% equity interest - Development pipeline of over 66 000m² GLA, with 17 active projects at various stages of completion". 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 is still in progress. In our view this represents a potential buying opportunity.