National Storage on the Up and Up27 August 2022
National Storage REIT increased earnings per security by 25% for FY22 as occupancy and rental rates increase push higher.
Managing Director Mr. Andrew Catsoulis said, “NSR has delivered an extremely strong FY22 result as we execute our growth strategy.”
Underlying earnings for the period increased by 46% to $126.5 million or 10.6 cps, 25% up from the previous year. The improvement in underlying earnings was driven by a 28% increase in Total Revenue facilitated by a 20.9% increase in Group REVPAM to $268/m2, an 18.8% increase in Group Rate to $302/m2, and a 2.8% increase in Group Occupancy.
Over a 3 year period, NSR has been the best performer amongst ASX200 A-REITs from both a share price performance and TSR perspective with unrivalled FY22 earnings growth of 24.7%.
NSR successfully executed its acquisition and development strategy with 23 acquisitions settled totalling $200 million. Five developments and expansion projects were completed in FY22, adding over 38,300m2 of new NLA to the portfolio. A further 34 projects are active, comprising an aggregate NLA pipeline of 240,000m2 of additional NLA, with 10 projects currently under construction. This will create important built capacity in the short to medium term, which will underpin our organic growth in coming years. NSR’s NTA per security increased to $2.34, up 24%, while total assets increased by 26% to $3.95 billion.
Group Occupancy increased by 2.8% to 88.9% with all Australian states and New Zealand showing strong revenue growth.
“NSR has demonstrated positive occupancy and rate growth with in excess of 64,000m2 of occupancy growth since 30 June 2021, and rate per square metre increasing by nearly 19% for the year, to $302/m2. Our Group REVPAM has also increased by almost 21% for the year to $268/m2, once again demonstrating the strength of our operating systems and our ability to fill the built capacity we have created in recent years,” said Mr. Catsoulis.
NSR remains committed to the successful execution of its “four pillars” growth strategy focusing on achieving organic growth through rate and occupancy increases, maintaining its acquisition pipeline, undertaking high-quality developments, expansions and redevelopments in key markets – all overlayed by its use of new technology and innovation initiatives. NSR has significant built capacity within the existing portfolio of approximately 85,000m2 of occupancy “runway” available across Australia and New Zealand before NSR reaches an occupancy level of 92%, which has the potential to generate up to $26 million of additional revenue, if achieved. Given NSR’s relatively fixed cost base, the majority of this potential revenue should fall to underlying earnings.
NSR currently has 34 active development and expansion projects with 10 projects under construction. Upon completion, NSR’s development and expansion pipeline will add an aggregate NLA of approximately 240,000m2, providing important additional built capacity, which will underpin its future growth.
Mr. Catsoulis said, “NSR utilises a combination of greenfield development, expansion, redevelopment projects, turnkey and joint venture arrangements in order to capitalise on its in- house development expertise and provide enhanced revenue and capital outcomes for NSR.”
Subject to no material changes in market conditions or operating environments, including no material deterioration in COVID-19 restrictions, regulations and impact, NSR is expecting FY23 underlying earnings per security to be a minimum of 11.1cps or minimum 5% growth.
NSR’s distribution guidance is in line with NSR’s distribution policy of 90% – 100% of underlying earnings.