Rising Debt and Rapid Expansion: What’s Next for National Storage REIT?

Strong Financial Performance

National Storage REIT (NSR) has reported a solid financial year for FY25, with gross revenue climbing 10.4% to $392 million and underlying earnings growing 6.4% to $164 million. These results exceeded the company’s earnings guidance, reflecting effective operational management and a resilient demand environment across Australia and New Zealand.

The company’s portfolio valuation rose by 9% to $5.3 billion, driven primarily by improved operational metrics and a weighted average capitalisation rate of 5.84%. Net tangible assets per security increased to $2.58, underscoring the strength of NSR’s asset base.

Aggressive Growth and Development Pipeline

NSR’s growth strategy is underpinned by an aggressive capital deployment program, with approximately $664 million invested during FY25 across acquisitions, developments, and expansions. This level of investment is unmatched in the Australian and New Zealand self-storage markets and highlights NSR’s capability to identify and execute high-value opportunities.

The company now operates over 280 storage centres and has a robust development pipeline comprising more than 50 projects that will add around 490,000 square metres of lettable area over the next two to three years. These new centres are designed to optimise land use and construction efficiency, aligning with rising utilisation trends and customer demand.

Capital Management and Financial Position

NSR maintains a conservative capital management approach, with gearing at a manageable 33% and an interest coverage ratio of 2.8 times. The company has expanded its debt facilities to $2.5 billion, including the issuance of $300 million in exchangeable notes and new lending arrangements, providing ample headroom for future growth.

Capital recycling remains a key focus, with proceeds from joint ventures and asset sales being reinvested into the development pipeline. The company has also enhanced its hedging profile, increasing the proportion of debt hedged from 43% to 60% over the past year, mitigating interest rate risks.

Innovation and Sustainability at the Forefront

NSR continues to lead in technology adoption and sustainability within the self-storage sector. The company is investing in digital marketing, AI-driven customer engagement, and automation to improve operational efficiency and customer experience.

On the sustainability front, NSR has significantly expanded its solar photovoltaic capacity, adding 15 new systems in FY25 for a total of 3,446 kilowatt peak, generating over 4,200 megawatt hours of solar power. The company is committed to reducing and offsetting its Scope 1 and 2 emissions by 2030, with ongoing initiatives in energy efficiency, smart metering, and sustainable building practices.

Positive Outlook and Strategic Focus

Early FY26 operational data shows continued momentum, with occupancy rising to 81.5% and revenue per available square metre (REVPAM) increasing by 1.4% since June 2025. NSR’s strategic pillars; organic growth, acquisitions and developments, technology innovation, and sustainability; remain firmly in place as the company aims to consolidate its position as a market leader.

With a strong balance sheet, an expanding portfolio, and a clear vision for sustainable growth, NSR is well positioned to deliver ongoing value to securityholders in the years ahead.