Stor-Age lifts earnings on strong SA growth, balances UK cost headwinds
Key topics:
SA rental income up 9.8% on same-store basis
UK margins pressured by rising costs
FY26 income guidance +5–6% reaffirmed
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BizNews Reporter
Stor-Age Property REIT Limited has reported solid trading results for the six months ended 30 September 2025, demonstrating continued revenue and occupancy growth driven predominantly by its South African operations. The company, which operates self-storage properties in both South Africa (SA) and the United Kingdom (UK), successfully increased its Distributable Income per Share (DIPS) and maintained a robust expansion pipeline, even as its UK segment navigated challenging trading conditions.
The Positives: Strong SA momentum and financial health
Stor-Age delivered a 4.5% year-on-year increase in distributable income per share, reaching 66.37 cents. Consequently, the board declared an interim cash dividend of 59.74 cents per share, matching the 4.5% growth rate based on a 90% payout ratio.
South Africa (SA) outperformance: The SA portfolio was the primary growth engine for the group. On a same-store basis, SA delivered impressive rental income growth of 9.8%, driven by a 1.0% increase in average occupancy and a significant 8.7% rise in rental rates. This performance translated into robust same-store Net Property Operating Income (NPOI) growth of 10.6%. Despite occupancy moderating slightly compared to March 2025 due to seasonal trends, management remains optimistic, expecting both occupancy and rental rates to strengthen in the second half of FY26, which is historically the group's strongest trading period.
Capital strength and portfolio expansion: The group maintained a healthy balance sheet, reducing its Loan-to-Value (LTV) ratio slightly to 30.9% (from 31.3%) and hedging 78.8% of its net debt against interest rate fluctuations. The SA REIT Net Asset Value (NAV) per share increased by 6.9% to R17.25.
Stor-Age remains highly active in portfolio expansion, aligning with its 2030 Property Strategy targeting 90 properties in SA and 70 properties in the UK. Notable achievements include:
Commencement of construction at the Bramley (Gauteng) development in June 2025 (5,600m² GLA).
The acquisition of Lock Up Storage in KZN in October 2025 for R95.0 million, adding 11,400m² GLA across two high-occupancy properties.
Securing two new development properties in Cape Town, including a flagship property at De Waterkant (6,500m² GLA) planned for construction in early 2026.
The Challenges: UK market and cost pressures
While the group overall performed solidly, the UK portfolio faced persistent headwinds during the period.
Moderated UK trading: Trading conditions in the UK were "more challenging". Same-store rental income growth was modest at 2.5%, supported primarily by higher rental rates (+2.0%) and stable occupancy (+0.4%). The market remains competitive, with operators increasingly relying on promotional activity and dynamic pricing.
NPOI decline due to costs: The biggest impact was cost inflation, which contributed to a 1.2% decline in UK Net Property Operating Income (NPOI) on a same-store basis. Direct operating costs in the UK rose by 7.8% (in £'000) year-on-year, driven by factors like higher business rates and increased insurance premiums, which have not yet been fully passed on to customers.
Deteriorating bad debt: Group-wide bad debt as a percentage of rental income increased to 0.74% (from 0.55% in the prior year). Specifically, bad debt ratios deteriorated in both SA (0.86% vs 0.58%) and the UK (0.60% vs 0.52%) compared to the previous period. Although this ratio remains comfortably below the 1.0% threshold, it indicates increased pressure on collections.
Outlook: Expansion and reaffirmed guidance
To drive future growth, Stor-Age is scaling its UK third-party management platform, leveraging its Storage King brand to partner with institutional capital like Hines and Time Investments, generating additional revenue streams with minimal capital outlay.
Despite the mixed geographic performance, the board reaffirmed its guidance for FY26 distributable income per share to be approximately 5% to 6% higher than FY25, based on expectations of continued strong demand, especially in SA, and anticipated interest rate cuts in both SA and the UK in the second half of FY26.