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Stor-Age raises R575 million and announces acquisition of UK portfolio

JSE REIT Stor-Age, South Africa’s leading and largest self storage property fund, has today announced the acquisition of a regionally dominant four-property portfolio in the UK, while also successfully raising R575 million in a significantly oversubscribed accelerated bookbuild.

The bookbuild saw R575 million of equity raised at a price of R14.30 per share, representing a 0.92% discount to the 30-day volume weighted average traded price.

The capital raised will support the finalisation of the UK acquisition, while also enabling the group to continue taking advantage of development and acquisition opportunities in both South Africa and the UK. The acquisition, secured at £37.5 million and consisting of a four-property portfolio offering 12 400m² of gross lettable area (GLA), has the potential to be expanded to approximately 18 900m² on a fully fitted-out basis.

Stor-Age continues to deploy capital strategically, adding quality and scale to its high-quality portfolio of self-storage assets in both markets. Despite the tough trading conditions and the continued impact of the COVID-19 pandemic, as one of only ten publicly-traded self-storage REITs globally, the company continues to demonstrate its resilience by delivering excellent operational and financial results.

The result of the accelerated bookbuild is a strong vote of confidence in the business and its strategy. Comments Stor-Age CEO Gavin Lucas, “We are pleased with the result of today’s capital raise, which once again demonstrates both the high regard in which Stor-Age is held and the significant appetite for the company’s stock. The capital raised will allow us to successfully continue with our strategy of growing our portfolio in both South Africa and the UK, adding quality and scale in both markets.”

The company’s South African pipeline consists of 10 properties, offering an estimated 59 200m² GLA at an approximate total cost of R850 million. In the UK, the pipeline consists of 4 properties offering an estimated 20 500m² GLA at an approximate total cost of £46 million.

Add Lucas, “Stor-Age and the self storage business model have a track record of resilience in constrained economic environments. The primary drivers of demand for our product are life-changing events and / or dislocation, be they positive or negative in nature. Maintaining a strategically well-placed and conservative balance sheet remains a priority for the company. Our LTV target range of 25% to 35% allows for the consistent execution of the strategy in both South Africa and the UK.”

In a trading update for the third quarter ended 31 December 2021, Stor-Age confirmed that total occupancy in the same store portfolio increased by 10 500m² (2.6%), whilst the closing average rental rate increased by 1.6% (annualised 6.3%) and 1.5% (annualised 6.0%) in SA and the UK respectively.

The group continues to be well-positioned to benefit in the medium to long-term from the rapid acceleration of change brought about by the pandemic.

The share closed yesterday at R14.88.

Stor-Age raises R575 million and announces acquisition of UK portfolio

JSE REIT Stor-Age, South Africa’s leading and largest self storage property fund, has today announced the acquisition of a regionally dominant four-property portfolio in the UK, while also successfully raising R575 million in a significantly oversubscribed accelerated bookbuild.

The bookbuild saw R575 million of equity raised at a price of R14.30 per share, representing a 0.92% discount to the 30-day volume weighted average traded price.

The capital raised will support the finalisation of the UK acquisition, while also enabling the group to continue taking advantage of development and acquisition opportunities in both South Africa and the UK. The acquisition, secured at £37.5 million and consisting of a four-property portfolio offering 12 400m² of gross lettable area (GLA), has the potential to be expanded to approximately 18 900m² on a fully fitted-out basis.

Stor-Age continues to deploy capital strategically, adding quality and scale to its high-quality portfolio of self-storage assets in both markets. Despite the tough trading conditions and the continued impact of the COVID-19 pandemic, as one of only ten publicly-traded self-storage REITs globally, the company continues to demonstrate its resilience by delivering excellent operational and financial results.

The result of the accelerated bookbuild is a strong vote of confidence in the business and its strategy. Comments Stor-Age CEO Gavin Lucas, “We are pleased with the result of today’s capital raise, which once again demonstrates both the high regard in which Stor-Age is held and the significant appetite for the company’s stock. The capital raised will allow us to successfully continue with our strategy of growing our portfolio in both South Africa and the UK, adding quality and scale in both markets.”

The company’s South African pipeline consists of 10 properties, offering an estimated 59 200m² GLA at an approximate total cost of R850 million. In the UK, the pipeline consists of 4 properties offering an estimated 20 500m² GLA at an approximate total cost of £46 million.

Add Lucas, “Stor-Age and the self storage business model have a track record of resilience in constrained economic environments. The primary drivers of demand for our product are life-changing events and / or dislocation, be they positive or negative in nature. Maintaining a strategically well-placed and conservative balance sheet remains a priority for the company. Our LTV target range of 25% to 35% allows for the consistent execution of the strategy in both South Africa and the UK.”

In a trading update for the third quarter ended 31 December 2021, Stor-Age confirmed that total occupancy in the same store portfolio increased by 10 500m² (2.6%), whilst the closing average rental rate increased by 1.6% (annualised 6.3%) and 1.5% (annualised 6.0%) in SA and the UK respectively.

The group continues to be well-positioned to benefit in the medium to long-term from the rapid acceleration of change brought about by the pandemic.

The share closed yesterday at R14.88.

Ceo Welcome Message by Joanne Solomon

The new year is upon us, and for most people and businesses, it represents an opportunity to push the reset button and start anew. However, like all things in life, one cannot look to the future without reflecting on the past.

2021 offers many lessons but, on the whole, will be remembered as a year of resilience and undying fortitude. It began with much uncertainty and trepidation, given the ongoing effects of the COVID-19 pandemic but ended in renewal and optimism.

As the year progressed and we found our footing, people and businesses began to navigate the new ways of living and doing business. For SAREIT, it was encouraging to see the sector’s commitment to improving the business environment, contributing to the betterment of South Africa’s economic situation. Between April 2020 and June 2021, REITs issued a total of R3.5 billion in rental discounts and deferrals to enable business sustainability during the pandemic. Therefore, these collective efforts reassure me that 2022 will be the long-awaited year of rebuilding and recovery.

During 2021, we experienced some significant shifts within the sector. Most of our members and the majority of the industry continued to focus on debt reduction and portfolio optimisation. The emphasis on optimising operations resulted in tenant retention and, for some, improved leasing activity. I am pleased that the efforts from all industry players have led to significant progress, reminding us of the sector’s income-yielding characteristic, which makes the property industry attractive. This positivity will aid the sector in reclaiming its position as a top-performing asset class.

With the peak of the fourth wave now passed and South Africa’s vaccination programme in full swing, we are excited to be hosting the much anticipated SA REIT Conference 2022, sponsored by Nedbank CIB. Set to take place on 3 February 2022, the specifically designed programme will highlight diverging views from the sector’s most influential players. Some of the high-profile
keynote speakers include Bart Gysens, Managing Director at Morgan Stanley London; Gina Schoeman, Managing Director at Citibank; Paul O’Flaherty, Executive Director for EY-Parthenon; Paul Badrick, Partner and Head of Public Practice at BDO South Africa; Dominique Moerenhout, Chief Executive Officer at European Public Real Estate Association (EPRA) and John Worth, Executive Vice President: Research and Investor Outreach at Nareit.

The conference will also afford us the opportunity to discuss critical issues affecting the sector. Key amongst them being: The Path to the Next Normal, Investing in SA REITs, SA Business Environment, ESG, SA REITs – An Extraordinary Journey, Transpiring Global Trends in REITs and Growth in Alternative Sectors. These robust discussions will be conducted by leaders from REITs, affiliate associations and industry bodies, asset and fund management, financial services, energy and ICT, government advisory and management consulting sectors. The diverse pool of panellists will provide an unmatched authentic and critical debate that will encourage us to challenge our current way of doing business and devise innovative ways to take our sector to the next level. To register and view the full programme, click here: https://bit.ly/3Bz80yp or follow us on Twitter @SA_REIT or LinkedIn SA REIT Association for regular updates on the conference.

Regardless of what lies ahead, I am confident that we are better equipped to navigate the year ahead.

Happy 2022 and the very best wishes to you, your loved ones and your businesses.

Hyprop Maintains Strong Liquidity

Hyprop, owner of premier retail properties in South Africa, Eastern Europe and the rest of Africa, has strengthened its balance sheet post its year-end, 30 June 2021, as a result of asset sales and shareholder reinvestments. It currently holds R1.6 billion of cash and R900 million of unutilised revolving credit facilities.

The strong liquidity position reflects the completion of the sales of Atterbury Value Mart in South Africa and Delta City Mall in Belgrade, Serbia, as well as R876 million received through an 85% uptake by shareholders of the share reinvestment alternative. As a result, Hyprop’s loan to value (LTV) ratio has firmed to 34%, on a like-for-like basis, from 37.2% at year-end.

In a financial and operating pre-close update for the four months to 31 October 2021, the Group warned that the emergence of a new variant of Covid-19 was likely to have an impact on most jurisdictions where Hyprop operates.

“We are confident that the Group’s strategy and key priorities remain relevant, even in a prolonged Covid-19 environment,” CEO Morné Wilken said. “Our priorities over the next months are to complete negotiations on the Hystead liquidity event, continue strengthening the balance sheet, reposition the South African portfolio for future growth, increase the dominance of the Eastern European properties in our overall portfolio, and pursue our non-tangible asset strategy.”

Operational performance

Hyprop was pleased to report a 4.6% increase in visitors to its South African malls and a 6.7% increase in Eastern Europe in the four months to end-October 2021 compared with the same period in 2020.

However, in both areas footfall has not yet reverted to pre-Covid levels. In Eastern Europe, the various restrictions imposed by governments to control the fourth wave of infections have had a negative effect on operations.

In South Africa, the group plans to launch its digital mall application in some of its malls in 2022. This will enhance its ability to communicate with shoppers and offer a range of unique services. There has been a visible improvement in the performance of travel and entertainment tenants, as well as luggage and jewellery. Only a few smaller tenants and cinemas are still receiving assistance.

Hyprop’s retail vacancies in South Africa were 2.6% in October, having shown a steady month-on-month improvement since end-June.

In Eastern Europe, tenant vacancies remained low at 0.2%, and the seven stores vacated by Inditex were successfully re-let – proof of the dominance of Hyprop’s malls in the region. Refurbishments of Skopje City Mall and the Mall Sofia are progressing well.

As the roll-out of vaccines in Eastern Europe advances, Hyprop is optimistic that restrictions will be further relaxed, and footfall will recover further in the first quarter of 2022.

In the sub-Saharan Africa (excluding South Africa) portfolio, most metrics are tracking above the same period last year. In Ghana, footfall is almost back to pre-Covid levels.Hyprop continues to pursue an exit from the sub-Saharan assets, while actively managing them to create value. Because of the US dollar liquidity crisis in Nigeria, it has been impossible to close out the sale of Ikeja City Mall, but progress is being made in disposing of the remaining three malls in Ghana.

Hyprop is pursuing a number of sustainability initiatives, including improving recycling, reducing waste, becoming more water- and energy-efficient and reducing carbon emissions in line with national targets. It has completed its waste audits and is finalising its energy audits.

“This data will aid us in ensuring that we manage our malls in the most effective way,” said Wilken.

“We remain committed to creating safe environments and opportunities for people to connect and have authentic and meaningful experiences, by owning and managing dominant retail centres in mixed-use precincts in key economic nodes in South Africa and Eastern Europe,” Wilken closed.

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