Stor-Age and Equites healthy

Stor-Age and Equites,

TWO of Cape Town’s biggest property specialists, Stor-Age and Equites, have seen their respective niches in storage and warehousing immunise profits from the ravages of the Covid-19 pandemic.

In a recent trading update Stor-Age said its property portfolio delivered a robust operating performance over the last six months with group occupancy increasing by 10 000m² since March 2020.

Stor-Age said an intense operational focus and discipline at a property level – supported by a specialised digital marketing platform – enabled it to extract occupancy and revenue growth in a particularly difficult trading environment.

CEO Gavin Lucas said: “Our hands-on management approach across both the SA and UK markets remains critical to delivering superior performance.”

In SA, year-on-year occupancy grew by 11 500m² (8 800m² on a like-for-like basis).

Lucas argued that the high levels of demand experienced, together with the growth in occupied space, continued to support the self-storage investment theme of resilience and the ability of the sector to outperform during an economic downturn relative (to the broader property market).

He indicated that the closing rental rate was up approximately 5.5% year-on-year in SA. The bulk of Stor-Age’s portfolio is still held in Cape Town with 16 sites – stretching from Brackenfell to Gardens and Bellville to Sea Point.

Lucas said that to increase customer retention and retain occupancy, Stor-Age suspended rental rate increases to customers in April 2020 – but recommenced with the customer rate increase programme in August 2020.

He noted that in SA the company selectively increased promotions offered to new customers moving in during the period to drive occupancy growth. “For the second half of the 2021 financial year, we expect promotions to be in line with pre-crisis levels.”

Lucas said Stor-Age immediately saw a significant reduction in enquiries and overall activity (both move-ins and

move-outs) as soon as the lockdowns commenced. This caused a decrease in occupancy in April and May. “As lockdown restrictions were eased, our primary focus was improving enquiry generation and driving move-in activity with a view to increasing occupancy.”

By the end of May, Lucas said enquiry levels returned to pre-Covid-19 levels.

“Despite the severely curtailed economic activity in the six-month period to end September 2020, enquiries achieved in SA and the UK were 14% and 19% ahead respectively of the prior comparable period on a same store basis.”

In the six-month period ending September 2020, Stor-Age collected 96% and 98% of rental due in SA and the UK respectively.

Lucas stressed that the collection of rentals and recovery of debt remained a key focus area. “Given the elevated risk levels in this area, we have committed additional resources to the task of cash collections, and we continue to refine and improve our internal processes…”

In SA, Stor-Age also offered settlement discounts and concessions to customers of approximately R2 million to improve cash collections.

In terms of new developments, after the easing of lockdown restrictions construction work recommenced at Tygervalley as well as the kicking off of the first phase of construction at Sunningdale in early June.

The Sunningdale development on Cape Town’s western seaboard – is being developed in a joint venture with Garden Cities. When completed, Stor-Age will earn ongoing property management fees from managing the property.

As at the end of September, Stor-Age’s secured development pipeline comprised approximately R740 million of new properties – which will add an estimated 53 000m² of gross lettable area.

The best news for Stor-Age shareholders is that the company intends its interim distributable earnings to be around R220 million for the six months ending September 2020 – up 3% from the prior year’s interim period.

Equites, which is the only specialist logistics REIT (real estate investment trust) on the JSE and boasts a market value of R11 billion based on 63, also pulled through the Covid-19 impasse with aplomb.

For the six months to end August, Equites – which built much of its early fortunes on properties in the Airport Industria node – reported an enviable average collection rate above 99.0%.

More importantly, Equites sits with cash and un-drawn facilities in excess of R1 billion – which means it is comfortably able to execute on its development pipeline.

Equites Andrea Taverna-Turisan said Covid-19 had accelerated e-commerce penetration globally and fuelled demand for prime modern logistics space.

“As COVID has shifted the e-commerce growth curve forward by a few years, we expect strong occupier demand for new A-grade logistics facilities in the short-to medium-term.” This is strongly benefiting Equites’ sprawling UK operations.

But in SA, the economy has been marred by a number of structural weaknesses. Taverna-Turisan said that although e-commerce penetration in SA was relatively low in 2019 at 1.4%, research suggested that online retail sales could be more than 5% of total retail sales in SA during 2020. This would, in part, be attributable to Covid-19.

“While e-commerce adoption has been credited with robust growth, we expect the strongest driver of occupier demand in the SA logistics market to stem from supply chain optimisation, as there is a clear trend of large retailers having a renewed focus on investing in digital transformation and their online platforms, which is typically supported by additional warehouse space.”


THE V&A Waterfront will be opening its new Makers Landing – a R63 million, 4 348m2 development – in early December.

Makers Landing is a new-concept curated food destination where visitors can experience a ‘farm to fork’ concept – with a distinct South African flavour.

The development will consist of farmers and fishermen supplying daily fresh produce to a market area with 35 stands as well as distillers, bakers, cheese makers and butchers.

There will also be five large anchor restaurants and eight small co-op eateries as well as an interactive ‘demo’kitchen.