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National Storage (ASX:NSR) grows profit thanks to increased demand

Market News, Real Estate
ASX:NSR      MCAP $3.240B
25 August 2021 11:55 (AEDT)

A National Storage centre in Carrara, Queensland. Source: National Storage

Self-storage provider National Storage (NSR) grew its profits from $121.8 million in FY20 to $309.7 million in FY21 as rising demand droves up revenue per available square meter (REVPAM).

Managing director Andrew Catsoulis said the REIT achieved record
occupancy and REVPAM growth, with occupancy increasing 86.1 per cent and REVPAM increasing 22.8% to $227/sqm.

“These results are a testament to the strength and resilience of our business model, and have been achieved despite considerable economic and market uncertainty over the course of the last 18 months,” he said.

Underlying earnings for the period increased by 28 per cent to $86.5 million as NSR settled 25 acquisitions (22 new centres and three development sites) totalling $352 million in the fiscal year.

The group has further acquisitions in mind, with over $100 million of additional purchases under consideration and four acquisitions already settled or contracted in FY22 totalling $33 million.

NSR has 22 projects in different phases of planning and development. These should provide about 150,000sqm of net leaseable area over the next two to three years, in addition to the 10 development and expansion projects completed this year.

“The focus on development and expansion saw 10 projects completed during the year, adding an additional 59,100m2 of NLA to the portfolio,” Mr Catsoulis said.

“NSR’s NTA increased by 15% to $1.89 while total assets increased by 23% to $3.25 billion.”

With about 90,000sqm of further built capacity remaining before NSR reaches a 90 per cent occupancy level, NSR believes it is sitting on the potential to produce an additional $27 million in income.

The company implemented new technological initiatives including process automation, cyber security and an enhanced website which Mr Catsoulis said would reap benefits for staff, customers and investors.

“We are extremely excited to be at the forefront of the next generation of self-storage technological innovation in Australia and look forward to its positive impact on our business operations,” he said.

NSR confirmed the final distribution of 4.2cps (totalling 8.2cps for FY21), as originally projected, and that the payment date would be September 3, 2021. This translates to a payment ratio of 96 per cent of the underlying earnings of 8.5cps.

The company expects FY22 underlying profits per security to rise by at least 10 per cent, assuming no major changes in market circumstances or operational environments.

Shares in NSR were unchanged at $2.29 as of 1:35 pm AEST.

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