National Storage Raises Cash, Expectations

National Storage (NSR) gave the real estate investment trust (REIT) sector a boost yesterday after going into a trading halt to allow it to raise $325 million from shareholders and investors.

At the same time the company upgraded its 2020 guidance which investors obviously liked.

The prices of other REITs firmed – GPT Group, up 2.1%, Scentre up 2.1% as well Mirvac up 1% and Dexus up 1.1%.

NSR said it was raising the cash to replenish its investment capacity after a busy 2021 so far.

The REIT has spent $373 million on acquisitions this financial year, including 24 storage centres and three development sites – 27 all told.

NSR said the raising will be structured as a 1-for-6.27 accelerated non-renounceable entitlement offer at $2 per stapled security – a skinny 3.8% discount to the last closing price of $2.08 on Monday.

National Storage said the money raised will also provide funding flexibility for the acquisition and development pipeline going forward.

It said that taking into account the impact of the equity raising and the company’s strong operating performance, it had upgraded its 2020-21 underlying earnings per share guidance to 8.5 to 8.6 cents per stapled security from a previous guidance range of 8.1 to 8.5 cents per stapled security.

Preliminary guidance for 2021-22 underlying earnings per share growth is expected to be no less than 8 per cent on this financial year (2020-21)

The trust said that following the rising its pro forma gearing will reduce from approximately 35% to 24% and pro forma net tangible asset backing will increase to $1.74 per stapled security.

It said it had seen record high combined Australian and New Zealand portfolio occupancy of 86.7% as at April 30 this year, an increase of 9.1% since June 30 2020 and up from 85.4% at the end of the first half in December last year.

“All states and territories in which NSR operates continue to perform strongly and all these areas are now trading over 80% occupancy, with over 35% of all centres now operating at over 90% occupancy, and approximately 70% operating at over 85%,” National Storage CEO Andrew Catsoulis said in Tuesday’s statement.

“We attribute this strong operational result to a positive macroeconomic environment as well as a number of internal operational improvements over the past 12 to 18 months.

“These enhancements include an updated and fully rebuilt website, the integration of our “contact-free move-in“ process, refinements made to our revenue management system, as well as the internalisation of a number of key functions in the business that were previously outsourced.”

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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