Update 10/28/15 – Stor-Age Self Storage opened its private-share placement and public offering under the fund name Stor-Age Property REIT Ltd. this week. The company is offering 71 million private shares to invited institutional and high net worth investors. A public retail offer was also provided to invited investors including customers, staff and suppliers. The initial price was expected to be R10 per share, with the final issue price determined by demand, according to a source.
“We’ve been very impressed with the response to date,” Lucas told a source. “Our corporate adviser and bookrunners, Questco, have been keeping us informed. When last I checked in slightly earlier on this afternoon, the offers were coming in really nicely, so we are tremendously pleased and well impressed with the response that our offering is receiving.”
Although Stor-Age originally indicated a goal of raising R715 million, Lucas told media outlet “BusinessDay Live” that the structure of the company’s move to a publicly traded REIT also includes the sale of another R120 million in shares from joint-venture partner Growthpoint Properties and another partner, bringing the total to about R820 million. At the end of the sales, Growthpoint will exit the business and another partner will partially exit.
“Principally the capital raising will be used to pay down debt and to essentially strengthen our balance sheet and put us in a prime position to continue to grow the business to both acquisitions and development in a very sustainable manner going forward,” Lucas told the source.
Company officials believe the growth of Stor-Age during the last five years, coupled with rising consumption and need for self-storage by consumers, indicated the market was ready for a publicly traded real estate investment trust. “This ushers in potentially a new era of genuine specialized listed property companies coming to the market, something that the market commentators have been certainly talking about for some time and on the back of the very healthy performance of the self-storage REITs in both the U.S. and Australian markets, as well as the U.K. market,” Lucas told the source. “In fact over the last few years, we felt it was the right opportunity for the South African market.”
10/12/15 – Stor-Age Self Storage Pty. Ltd., which operates 37 locations in South Africa, intends to list itself as a real estate investment trust (REIT) on the Johannesburg Stock Exchange (JSE) in November under the fund name Stor-Age Property REIT Ltd. The group will list an initial portfolio of R1.3 billion in an attempt to raise about R715 million from investors including customers, staff and suppliers, according to a press release. The company will use the funds to expand assets within its current portfolio and look for acquisitions to grow its national footprint, officials said.
The company is targeting a market capitalization of around R1.2 billion upon listing, with the final price per share determined after the “institutional bookbuild,” which will take place during the first week of the two-week offer period. The second week will be set aside for retail investors to participate, the release stated.
Stor-Age officials are confident in the listing, citing the success of self-storage and other property-based REITs in Australia, the United Kingdom and the United States. The company would be the first self-storage REIT listed on the JSE, the release stated. “The majority of our listing portfolio assets are considered ‘mature,’ meaning over 80 percent tenancy,” Gavin Lucas, CEO, told “SA Commercial Prop News,” a real estate website. “This stabilizes our portfolio, minimizes investor risk and provides visibility of earnings.”
If the capitalization doesn’t go as planned, Stor-Age will likely opt to reschedule the listing. “Listing Stor-Age is a choice, not a necessity, and we will always act in the best interests of the company,” Lucas said. “We have accumulated 10 years as a profitable, respected operator with proven performance, and given the extraordinary prospects of this asset class, now is opportune to offer local investors first-time exposure to the growing, recession-resilient niche self-storage asset class through an established low-risk vehicle.”
Analysts believe the move could be a smart one for Stor-Age. “Storage has been a very successful sector globally, especially in the U.S.,” Keillen Ndlovu, head of listed property funds for asset management group STANLIB, told the source. “We believe that there is room for growth in South Africa over time. It's also refreshing as well to have a new sector in the listed property sector which is traditionally retail, office and industrial sectors.”
Headquartered in Cape Town, Stor-Age operates self-storage facilities in six South African cities. Established in 2006 by the Lucas family, it is the operator appointed by Stor-Age Property Fund Managers Pty. Ltd. to manage and market the property portfolio owned by Stor-Age Property Holdings Pty. Ltd.
- BD Live: Business Day TV: Stor-Age Sees Fantastic Opportunity to Grow Portfolio in SA, Says CEO
- Property Wheel: Stor-Age to list on JSE in November
- SA Commercial Prop News: SA's First Self-Storage REIT to List on JSE
- Stor-Age: Stor-Age Announces Intention to List on the Johannesburg Stock Exchange