Abacus Storage King reported a striking turnaround with a $67.8 million net profit for H1 2024, up from just $0.4 million a year earlier, alongside a raised interim distribution reflecting robust growth in the self-storage sector.
- Net profit jumps to $67.8 million, a 171-fold increase year-on-year
- Funds from operations (FFO) rise 15.1% to $43.3 million
- Interim distribution increased to 3.1 cents per stapled security
- Portfolio valued at $3.1 billion with 147 self-storage assets
- Refinanced $1.25 billion debt with new unsecured facility
Robust Financial Turnaround
Abacus Storage King (ASK) has delivered a remarkable financial performance for the half-year ended 31 December 2024, reporting a statutory net profit after tax of $67.8 million, a dramatic increase from the $0.4 million recorded in the prior corresponding period. This surge underscores the company’s successful transition since its ASX listing in August 2023 and highlights the growing demand in the self-storage sector across Australia and New Zealand.
Funds from operations (FFO), a key metric for real estate investment trusts, rose 15.1% to $43.3 million, while underlying earnings remained solid at $42.4 million. The company’s basic earnings per stapled security climbed to 5.16 cents, reflecting improved operational efficiency and revenue growth.
Strategic Growth and Portfolio Expansion
ASK’s portfolio now encompasses 147 high-quality metropolitan-focused self-storage properties valued at approximately $3.1 billion. The portfolio includes 126 trading stores and 21 developments, covering over 660,000 square meters of net lettable area. Occupancy rates remain strong at 91%, with average rental rates and revenue per available meter (RevPAM) showing encouraging growth trends.
The company continues to pursue growth through acquisitions and developments, having invested $59.5 million in seven new sites during the period, including both operating and development properties. The development pipeline remains active, with three new stores expected to open in the second half of FY25, adding 21,000 square meters to the portfolio.
Capital Management and Refinancing
In a significant capital management move, ASK refinanced its $1.25 billion secured debt in November 2024 with a new unsecured facility, enhancing financial flexibility. The new facility includes a multi-currency revolving credit line and a bridge facility, supporting the company’s growth ambitions while maintaining a conservative gearing ratio of 29%, comfortably within its target range.
Approximately 77.3% of the drawn bank debt is hedged at fixed rates, mitigating interest rate risk amid a challenging macroeconomic environment marked by inflationary pressures and elevated interest rates.
Distribution and Investor Returns
Reflecting its strong earnings and cash flow, ASK declared an interim distribution of 3.1 cents per stapled security, up from 3.0 cents in the prior period. This distribution, payable in late February 2025, underscores the company’s commitment to delivering steady returns to securityholders while balancing reinvestment in growth initiatives.
The distribution reinvestment plan (DRP) will not apply to this interim payment, signaling a preference for cash returns amid ongoing portfolio expansion.
Outlook and Market Position
ASK’s leadership, including Chair John O’Sullivan and Managing Director Steven Sewell, emphasize the company’s position as the leading self-storage operator in Australasia, with the Storage King brand maintaining its status as the most Google-searched self-storage name in Australia. The company’s focus on customer experience, operational excellence, and strategic asset management positions it well to capitalize on the fragmented market landscape.
While the broader economic environment remains uncertain, ASK’s diversified portfolio, strong balance sheet, and active development pipeline provide a solid foundation for continued growth and resilience.
Bottom Line?
Abacus Storage King’s strong half-year results and strategic refinancing set the stage for sustained growth amid evolving market conditions.
Questions in the middle?
- How will rising interest rates and inflation impact ASK’s earnings and valuation in FY25?
- What are the company’s plans for further acquisitions in the fragmented self-storage market?
- How will the new unsecured debt facility influence ASK’s capital allocation and risk profile?