The National Storage REIT (ASX: NSR) share price is up more than 15% in August but will today’s results be enough to sustain the momentum?
National Storage is the largest self storage provider in Australia and New Zealand with over 125 properties located across the two countries. These properties give access to more than 68,000 storage units with a total lettable area of approximately 650,000 square metres. The company has grown quickly having listed on the ASX in December 2013 as the first listed internally managed and integrated operator of self-storage centres in Australia.
National Storage’s 2019 Financial Results
The self-storage business has reported net profit after tax of $144.8 million with underlying profit up 21% to $62.4 million. The financial result is broadly in line with guidance previously provided by company management.
National Storage undertook a number of acquisitions during the financial year totalling $403 million which has resulted in a 36% increase in assets under management to $1.95 billion as of 30 June.
Organic occupancy growth of 1% was achieved in both Australia and New Zealand, taking its Australian portfolio occupancy rate to 81.4% and New Zealand to 85.7%.
Management have announced a final dividend of 5.1 cents per share, which brings the full year distribution to 9.6 cents. This represents a trailing dividend yield of 5.2% based on the pre-open share price.
The Rask Finance video below explains dividends:
Net tangible assets grew by 8% over the year to $1.63 per security. Adding the distributions this equates to a total return of 15% over the course of FY19.
Strategic Initiatives
Alongside the results, National Storage also announced three strategic initiatives aimed at maximising shareholder returns. The three initiatives are for a continued expansion into New Zealand where it currently has 22 storage centres, accelerating the current development pipeline and pursuing attractive joint venture opportunities.
Management Commentary & Outlook
Commenting on the result, CEO Andrew Catsoulis said: “NSR has delivered another strong result in line with guidance, as we continue to execute our growth strategy.”
Discussing the company’s transformation plan, Mr Catsoulis said that the company was “focused on delivering continued organic growth through a combination of improved people management, increasing automation, more sophisticated and timely reporting, and the use of technology and innovation designed to improve our bottom line.”
The REIT has provided earnings guidance saying it expects to deliver underlying earnings growth of at least 4% for FY20 providing no unforeseen events or major changes to market conditions arise.
Should You Buy Shares In National Storage?
National Storage is currently going through a period of rapid expansion and looks to be growing its portfolio of assets carefully and sensibly. The strong dividend yield is alluring in the current low interest rate environment however the share price has had a great run up in August and personally, I think it is now fully priced.
Whilst the share price may well march higher still after today’s result, I would be waiting patiently for a pullback before considering a purchase.
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At the time of publishing, Luke has no financial interest in any companies mentioned.
