Storage King Group reports $154.3 million profit, $3.9 billion asset base, sets FY27 guidance at 4.5 cps

Profit dips sharply despite resilient operating metrics

Storage King Group (ASX:SKG) delivered a statutory net profit after tax of $154.3 million for the year ended 30 June 2026, down 46.6% from $289 million the prior year. This decline contrasts with relatively steady funds from operations (FFO), which fell only 3.4% to $82.1 million, reflecting the impact of non-cash fair value adjustments and one-off items. Underlying earnings per security remained stable at 6.50 cents, while distributions held firm at 6.20 cents per security, underscoring the group's commitment to maintaining shareholder returns amid a challenging backdrop.

Key operating metrics showed resilience: Australian revenue per available square metre (RevPAM) rose 2.7% to $348, though total portfolio occupancy dipped slightly to 90.2%. The New Zealand portfolio faced headwinds from currency weakness and completed capital works, resulting in an 11.7% decline in RevPAM on a constant currency basis. Despite increased discounting and competitive pressures, Storage King maintained a stable operating margin of 62%, highlighting disciplined expense management.

Management internalisation marks strategic turning point

On 30 June 2026, SKG completed the internalisation of its management platform, acquiring Storage King Funds Management Limited and ending its external management agreement with Abacus Group. This move positions SKG as the only vertically integrated, owned, operated, and managed self-storage REIT on the ASX. Management incentives are now directly aligned with securityholder outcomes, with key leadership retained to ensure continuity.

The internalisation is expected to generate approximately $7 million in annual cost savings, with pro forma FFO per security uplift of around 6%. The simplified governance structure aims to enhance scalability and operational flexibility, supporting the group's substantial growth pipeline and future acquisitions.

Robust portfolio growth and development pipeline

SKG's portfolio now encompasses 204 stores across Australia and New Zealand, with total assets rising 8.1% to $3.9 billion. The portfolio includes 132 owned trading stores and 72 third-party stores, spread across key metropolitan markets, with 66% of Australian assets located in Sydney, Melbourne, and Brisbane.

FY26 saw a record year for new developments, with four next-generation stores opened and five expansions completed, adding 34,500 square metres (5%) to net lettable area (NLA). The development pipeline includes 16 assets expected to deliver approximately 110,000 sqm (15%) of additional NLA over the short to medium term, alongside 23,000 sqm of expansions. Acquisitions added a further 10,000 sqm (1%) of NLA at a cost of $78 million.

SKG highlights a significant embedded growth opportunity from stabilising and acquisition portfolios, with these assets ramping toward established portfolio metrics without requiring additional capital investment. The group forecasts that these segments could add around $71 million in annual storage revenue at maturity.

Capital management and financial position

Gearing increased to 33.7%, within the group's target range of 25% to 40%, providing approximately $400 million of additional capacity for growth. The weighted average cost of debt was 3.1%, benefiting from historically favourable hedges, though these are rolling off, contributing to an expected rise in finance costs in FY27.

In connection with internalisation, SKG upsized its syndicated loan facility by $300 million to $1.55 billion without changing pricing or covenants. Interest rate hedging covers 72% of drawn debt, with a weighted average hedge maturity of 2.3 years.

FY27 guidance and strategic priorities

SKG has provided FY27 distribution guidance of 4.50 cents per security, reflecting near-term earnings headwinds from higher interest costs as development projects move into stabilisation. The payout ratio range is widened to 80%–100% of FFO to retain earnings for reinvestment in the growth pipeline.

Management’s FY27 priorities focus on embedding the internalised structure, expanding the proprietary revenue management system (RMS) capabilities, executing the development pipeline (approximately 50,000 sqm expected for delivery in FY27), and ramping recent acquisitions and developments toward established portfolio occupancy and rental metrics.

CEO Nikki Lawson described FY26 as a defining year, with the internalisation creating a simpler, more efficient, and aligned business. She cautioned that FY27 represents a transition phase where the cost of growth becomes fully visible, with a focus on converting embedded opportunities into earnings growth and long-term value.

Sector challenges and sustainability initiatives

The self-storage sector remains competitive, with elevated discounting and inflationary pressures. New supply continues to moderate but remains elevated in some markets, particularly in New Zealand where economic conditions are weaker. SKG’s RMS deployment and strong brand recognition are key levers to navigate these challenges.

SKG continues to advance its ESG program, targeting net zero scope 1 and 2 emissions by 2030, achieving a 5% year-on-year reduction in emissions intensity and expanding solar installations to 95 sites. The group also achieved Great Place To Work accreditation in both Australia and New Zealand and maintains strong customer preference and net promoter scores.