On 27 February 2019, National Storage REIT (ASX: NSR), a company from the real estate sector which manages and operates self-storage centres, announced in half-yearly results of FY2019 for the period ended 31 December 2018.
During the period, the company reported a fall in its IFRS profit after tax by 55% to $27.1 million as compared to its previous corresponding period. There was an increase in the earnings by 17.4% to $26.3 million as compared to 1H FY2018. As a result, the earnings per share also declined by 2.3%.
The company declared a dividend of 4.5 cents per share. There was an increase in the total asset under management by 11% to $1.6 billion. The net tangible asset reported a rise of 1% to $1.52 per stapled security. The investment properties held by the company increased by 11% to $1,593 million. The company’s gearing range during the period was 25-40%. By the end of 31 December 2018, the gearing was 34% which was 38% by the end of 30 June 2018. The company has drawn $625 million in the form of debt.
During the period, the company completed the acquisition worth $135 million.
The company follows a strategy to develop multiple revenue streams to maximize returns. Its strategy delivered healthy growth during the period. There was an increase in the operating profit by 22% to $42.2 million as compared to pcp. The operating margin increased by 8%. The storage revenue had grown during the period by 9%.
By the end of 31 December 2018, the company has hedged $467 million. It was also successful in raising $175 million in the form of equity.
The period reported an Australian portfolio occupancy of 80.4% where approximately 60% are operational. WA reported a growth of 4%, Tasmania by 26% and ACT by 2.4%.
New Zealand Update
New Zealand reported a growth in its asset with the majority of assets trading or having occupancy above 85%. There is an ongoing discussion with the shortlisted potential partners for new capital partnership. The company has acquired three new development sites and are under due diligence to date in 2019.
In 1H FY2019, the company made eleven new acquisitions followed by two development sites and total asset worth $135 million settled during the period. There are still four new centres due to be completed and will open throughout FY2019 in Bundall, Brendale, Milton and Fremantle.
Development and Expansion Pipeline Update
There are 12 expansion and development operations which are at various stages of progress. Also, there are multiple new sites of the company with an ongoing repurposing/expansion of existing sites across multiple states and territories.
FY19 Guidance and Outlook
For the remaining part of FY2019, the distribution guidance is expected to be in the range of 9.6 cents to 9.9 cents per stapled security. The company expects its underlying earnings growth to be in a range of $62.5 million to $64.5 million.
In the last six months, the stock has generated a return of 9.88%. The stock of NSR closed the day’s trading at A$1.875, down by 0.794% as compared to previous trading day’s closing price. The company has a market capitalization of A$1.26 billion with approximately 668.49 million outstanding shares and a PE ratio of 572.73x.
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