National Storage REIT delivered a solid FY25 with a 6.4% rise in underlying earnings and a robust $303 million acquisition spree, underpinning its growth ambitions amid a strong development pipeline.
- Underlying EPS up 6.4% to 11.9 cents
- Investment property valuation climbs 9% to $5.3 billion
- 28 acquisitions totaling $303 million completed
- 54 active development projects with 98,000m² added in FY25
- Sustainability initiatives include solar at 151 sites
Strong Financial Performance and Growth
National Storage REIT (ASX – NSR) has reported a resilient FY25, posting an IFRS profit after tax of $236.1 million and underlying earnings per security (EPS) rising 6.4% to 11.9 cents. This performance exceeded guidance and reflects the REIT’s ability to balance occupancy growth with rate increases, achieving a 1.0% rise in revenue per available metre (REVPAM) to $277.3 per square metre.
The company’s operating margin held firm at 69%, despite higher statutory costs and targeted marketing efforts that successfully added over 32,000 square metres of occupancy in the June quarter. Net tangible assets (NTA) per security increased 2.4% to $2.58, supported by a 9% uplift in investment property valuations to $5.3 billion, driven largely by operational improvements.
Acquisitions and Development Pipeline Fuel Expansion
NSR’s growth strategy is clearly in motion, with 28 acquisitions settled during the year totaling $303 million. These acquisitions include 16 sites earmarked for future development, reinforcing the company’s medium-term growth visibility. The REIT now manages an extensive development pipeline comprising 54 active projects and nearly 489,000 square metres of net lettable area (NLA).
In FY25 alone, 14 new developments were completed, adding 98,000 square metres of NLA with the potential to generate approximately $29 million in additional revenue once fully stabilised. The company’s let-up portfolio showed strong momentum, with REVPAM increasing 17.1% and occupancy rising to 63.6%.
Capital Management and Credit Profile
NSR successfully executed $300 million in exchangeable notes at a 3.625% coupon, maintaining a solid capital structure. Moody’s reaffirmed the REIT’s Baa2 credit rating with a stable outlook, underscoring confidence in its financial position. Proceeds from the National Storage Ventures Fund, a joint venture with GIC, helped repay debt and strengthen the balance sheet, with approximately $280 million returned to NSR following tranche settlements.
Sustainability Progress and Outlook
On the sustainability front, NSR continues to advance its environmental commitments, aiming to reduce and offset Scope 1 and 2 emissions by 2030. The REIT generated around 4,220 MWh of solar energy in FY25, with solar installations now operational at 151 locations. Energy efficiency initiatives and renewable sourcing remain key pillars of its strategy.
Looking ahead, NSR has set FY26 underlying earnings guidance at a minimum of 12.4 cents per security, with distributions expected to include 15-20% fully franked dividends. The company reaffirms its policy to distribute 90-100% of underlying earnings, signaling confidence in ongoing cash flow generation.
Bottom Line?
National Storage’s strong FY25 results and expansive pipeline position it well for sustained growth, but execution on developments and market conditions will be key to watch.
Questions in the middle?
- How will rising costs and inflationary pressures affect operating margins in FY26?
- What is the timeline and expected return profile for the 54 active development projects?
- How might evolving sustainability regulations impact capital expenditure and operational costs?