Despite another solid showing in the year to end-March for Stor-Age, the softness in the specialist property counter’s UK business might be something for investors to keep an eye on over the next 12 to 24 months. Bear in mind, Stor-Age’s strategy is to continue its expansion in both the UK and South Africa, with a goal of 160 self-storage properties across the group by 2030.
Stor-Age investors are strongly focused on income and the real estate investment trust declared a final distribution of 56.62c a share, bringing the total distribution for financial 2026 to 116.36c a share. This is an increase of 5.1% over the prior period, and the company has guided to a 5% increase in distributable income for financial 2027.
The local business was the star in the latest full-year results. Occupancy was broadly in line with financial 2025, having picked up after a somewhat weak first half. Rental growth was robust at 8.6%, coupled with a pickup in occupancy to 93.4% across the portfolio, resulting in a 10.5% increase in rental income.
Demand remains robust locally. Stor-Age closed three acquisitions totalling R200m during the year, including two in KwaZulu-Natal, which is outside its traditional markets of the Western Cape and Gauteng. Cape Town developments still in progress include its marquee De Waterkant site and its expansion of the Sunningdale site. Its marquee Melrose site in Joburg is under construction and due to come online in the final quarter of 2027.
The UK business performed more sluggishly. The key concern is that rental income increased only 1.1% and occupancy was flat at 81.6%
The UK business, on the other hand, performed more sluggishly. The key concern is that rental income increased only 1.1% and occupancy was flat at 81.6%. Given rising costs, net property operating income in the UK declined 0.8% for the period.
The UK has historically traded at much lower occupancy levels than the South African business, but the poor rental growth suggests that perhaps the maudlin state of the UK economy may be affecting even a business that has generally been resistant to economic cycles.
CEO Gavin Lucas still believes there are strong growth opportunities in the UK and that the latest UK results are a normalisation from the heady days post-Covid. But investors will need to keep an eye on whether this growth potential actually comes through — not just in increased gross lettable area and the number of properties, but in net operating income.
The UK business, like the South African business, has multiple projects under way, primarily through joint venture partners and associated management agreements.
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