national-storage-shop-front-jo-people-owners-feature
National Storage currently enjoys a record high occupancy rate. Image – National Storage.
  • Move to fund previous acquisitions and reduce gearing
  • EPS guidance now 8.5-8.6 cents per stapled security
  • Record occupancy rate of 86.7%

During the pandemic, storage companies have been performing particularly well.

The Property Tribune recently reported that the surge was “Fuelled by significant growth in e-commerce and shrinking living spaces,”.

“According to CBRE’s Nick Zenonos, over the past twelve-months demand for self-storage facilities has soared, resulting in prices of $7,500 per square metre increasing to over $10,000.”

Liam Wignell, The Property Tribune

CBRE’s William Gathercole also told The Property Tribune that “Many self-storage properties in Australia are well-located in inner-city areas, which provides secure underlying value due to their potential to be converted into alternative uses such as residential, should self-storage demand ever fade,”.

In the case of National Storage (ASX: NSR), that strength of storage showed in its half-yearly report card.

Operating profits were up p 14% to $56 million for the half-year, so too its underlying earnings, also up 14%.

Overall profit after income tax was reported as $101.4 million, down from half-yearly results in 2020 of $150.7 million, the COVID pandemic a distinct but not too damaging impact.

Today

As Tuesday trading opened, the storage REIT announced it will be raising $325 million.

“The Equity Raising will be structured as a 1-for-6.27 accelerated non-renounceable entitlement offer”

National Storage

“The Entitlement Offer is fully underwritten. The offer price of the Entitlement Offer has been set at $2.00 per stapled security.”

NSR said it is a 3.8% discount to yesterdays closing price of $2.08.

Provided on equal footing as existing stapled securities from the allotment, the offer will be used to repay debt and reduce December 2020 gearing levels.

“NSR has transacted on a number of high-quality acquisition opportunities during FY21 totalling $373 million, resulting in pro forma gearing of approximately 35%.”

“Offer proceeds will be used initially to repay debt to strengthen NSR’s balance sheet, reducing pro forma December 2020 gearing levels from approximately 35% to 24%,”.

National Storage

This represents “the low end of NSR’s target gearing range of 25% – 40%, providing NSR additional funding flexibility to continue its consolidation strategy and pursue further growth through the development program.”

Other effects

Occupancy rates have increased 9.1% since June last year, previously 77.6%, as of 30 April this year, the occupancy is 86.7%.

Earnings per share guidance have also been upgraded for this financial year, now 8.5 – 8.6 cents per stapled security.

Net tangible assets will also increase to $1.74 per security.

The company peaked at $2.21 back in late April and now trades around $2.05 over the past fortnight.

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