Abacus Storage King Delivers 15% FFO Growth Amid Expansion Drive

Strong Financial Turnaround

Abacus Storage King (ASX:ASK) has reported a striking turnaround in its half-year results for the period ended 31 December 2024, posting a statutory net profit of $67.8 million. This represents a dramatic improvement of $67.4 million compared to the prior corresponding period, which was weighed down by property devaluations. The company’s funds from operations (FFO) rose 15.1% to $43.3 million, reflecting both operational resilience and effective portfolio management.

Distributions to security holders increased by 3.3% to 3.1 cents per security for the half, with guidance reaffirmed at 6.2 cents for the full year. This payout reflects a healthy distribution ratio of 94% of FFO, underscoring ASK’s commitment to delivering steady income streams.

Operational Momentum and Portfolio Strength

ASK’s core operating metrics highlight a portfolio firing on all cylinders. Average revenue per available metre (revPAM) climbed 5.4% to $339 per square metre, driven by a 4.4% increase in rental rates to $373 per square metre. Occupancy also improved by 90 basis points to 91.0%, signaling strong demand and effective asset management. Western Australia and New South Wales continue to lead performance, while Victoria and the ACT showed encouraging growth, with the latter rebounding after post-COVID pricing resets.

Growth Through Acquisition and Development

ASK’s growth strategy is multi-faceted, combining acquisitions, developments, and platform enhancements. During HY25, the company invested $60 million acquiring four operating stores and three development sites, adding 13,200 square metres of net lettable area (NLA). The development pipeline is particularly ambitious, with 19 projects underway that will add 112,000 square metres (a 17% portfolio increase), alongside six expansions adding another 18,000 square metres.

These expansions are expected to not only increase scale but also enhance rental rates and portfolio quality over time. The company’s platform, anchored by the Storage King brand, remains Australia’s most Google-searched self-storage brand, providing a strong lead generation advantage. Investments in revenue and data management technologies are poised to further improve margins and customer engagement.

Sustainability and Capital Discipline

ASK continues to embed sustainability into its operations, targeting net zero emissions by 2030. The company reduced scope 1 and 2 greenhouse gas emissions by 7.5% compared to HY24 and expanded solar installations to 62% of its portfolio. This ESG focus aligns with broader investor expectations and operational efficiencies.

Financially, ASK maintains a conservative capital structure with gearing at 29.0%, comfortably within its revised target range of 25-40%. The company has approximately $600 million in funding capacity to support future acquisitions and developments. The average cost of debt was 4.0% in HY25, with no debt maturities due in FY25-26, providing stability and flexibility.

Outlook and Market Positioning

Management remains optimistic about the medium-term outlook, citing the portfolio’s urban, right-sized locations and the strength of the Storage King platform as key competitive advantages. The company expects continued organic growth, sector maturation, and successful execution of its acquisition and development pipeline to drive sustained income and value creation.

CEO Steven Sewell highlighted the fragmented nature of the self-storage market as an opportunity for ASK to consolidate and grow. The reaffirmed FY25 distribution guidance and targeted payout ratio reflect confidence in stable market conditions and operational execution.