Why The Market Is Still Upbeat About ASX: NSR?

Why The Market Is Still Upbeat About ASX: NSR?

National Storage REIT (ASX: NSR) has recently reported the financial results for half-year ended December 2018. The company generated an IFRS profit after tax amounting to $27.1 million. The top management of the company had stated that the results demonstrate the resilience of the business and the company’s focus towards driving increased income with the help of multiple revenue streams. This consist of an operational performance, centre acquisitions, new developments as well as expansions. The company’s total assets under management witnessed a rise of 11% and stood at $1.6 billion because of the acquisition of 11 existing storage centres, plus 2 new development sites.

The company’s Revenue Per Available Square Metre (or REVPAM) for 1H FY 2019 was steady with the corresponding period but, however, got impacted by a short-term fluctuation with respect to average occupancy over the half year. The company expects that growing pipeline of 12 new development and expansion projects would be enhancing its continued growth by providing important additional capacity. The company’s finance costs stood at $12.6 million in 1H FY 2019 which reflects the rise of 33% on YoY basis which reflects increased borrowings related to the acquisitions. The company had cash of $53.5 million as at 31 December 2018 which can be considered at a decent level.

The company had also confirmed an interim distribution amounting to 4.5 cps which was declared previously on 18 December 2018 and which had the payment date of 1 March 2019. The company had wrapped up a fully underwritten $175.4 million equity raising which led to the issue of 105,677,937 new stapled securities. The company happens to operate a distribution reinvestment plan (or DRP) enabling the eligible security holders to get part or all of their distribution in the form of securities instead of cash.

With respect to outlook, the company affirmed its underlying EPS guidance of 9.6 – 9.9 cps and underlying earnings guidance of $62.5 – $64.5 million for FY 2019 on the assumption that no material changes would take place in market conditions. The company also stated that, in the half-year ended December 2018, the property investment portfolio witnessed an expansion following the acquisition of 14 storage centre assets throughout Australia and New Zealand involving consideration of $134.6 million and adding 52,500 of a net lettable area to the portfolio of NSR.

Also, it can be said that the company’s annual dividend yield was, more or less, in line with the broader industry median. As per the Australian Securities Exchange or ASX, the company’s annual dividend yield stood at 5.37% while the industry median (Residential and Commercial REITs) stood at 5.5%. As on March 14, 2019, the company is having the market capitalization of $1.18 billion, and its stock price is trading slightly towards the higher level. The company’s stock has generated a 1.74% return in the span of the previous 6 months.


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