National Storage REIT

Decent Performance in FY18: National Storage REIT (ASX: NSR) is in the self-storage industry. The company founded in December 2000 and listed in December 2013. The company offers a variety of services which includes self-storage services, business storage services, vehicle storage, packaging services, vehicle and trailer hire, insurance and other value-added services. The company has delivered decent performance in FY18 wherein total revenue grew by 19% to $135.3 Mn over the prior year. It was mainly driven by organic occupancy growth of 4% across the portfolio, pursued accretive acquisition opportunities across Australia and New Zealand as a part of its active growth strategy, and enhanced customer experience on its growing platform of above 50,000 business and residential storage customers in FY18. Based on topline growth, underlying Earnings for FY18 came in at $51.4 million, an increase of 12.5% over the $45.7 million recorded in the corresponding period in 2017. Profit after tax for the year stood at $145.8 million, representing an upside of 41% over the prior year which was $103.4 million. The company ended the year with $19.9 million in finance costs, and it is due to higher borrowings associated with acquisitions. On Balance Sheet front, NTA (net tangible asset) has increased by 13% to $1.51 per stapled security in FY18 over the $1.34 per stapled security in the corresponding period in 2017. Investment properties held increased by 23% from $1163 million to $ 1431 million. The company ended the year with $21.3 million in cash over the $23.2 million in the corresponding period in 2017.


FY18 Financial Highlights (Source: Company Reports)

Moreover, the company generated REVPAM (Revenue Per Available Square Meter) of $220/sqm in 2018, representing an upside of 3.8% over the $216/sqm recorded in the corresponding period in 2017. Additionally, for FY19, the company is anticipating underlying EPS to be around 9.6 cps to 9.9 cps. In addition to this, underlying earnings for FY19 will be in the range of $62.5 Mn to $64.5 Mn. Meanwhile, the share price of the company has risen 11.83% in the past six months as on 17 December 2018, and it is trading towards a higher level. Hence considering fundamentals of the company and reviewing management future goals and current stock performance we maintain our “Hold” recommendation on the stock at current market price $1.755.
 

Viva Energy REIT

Completed Transaction Settlement with Caltex Longwarry properties: VIVA Energy REIT (ASX: VVR) is in the Real Estate industry. The main objective of the company is to maximize the long-term income and capital returns for the benefit of all security holders. Recently, the company has completed the transaction settlement of its acquisition with Caltex Longwarry Eastbound and Caltex Longwarry Westbound properties with the total value of $62.13 Mn. The primary objective of this deal is to diversify its property portfolio geographically. Further, the investment outlines strong lease characteristics which is estimated to be accretive to the shareholders’ capital. The company has delivered decent performance in 1HFY18 wherein total income grew by 4% on Y-o-Y basis and amounting to $81.9 million. Total Expenses for the period came in at $22.2 million, a decrease of 37.6% over the $35.6 million recorded in the corresponding period in 2017. Despite the rise of finance costs, PAT grew by 38.3% to $59.6 million in 1HFY18 over the prior corresponding period. Distributable Earnings per Security for the year stood at 6.99 CPS, an increase of 2.8% over the 6.80 CPS recorded in the corresponding period in 2017. On Balance Sheet front, NTA has increased by 6% to $2.20 per security in FY18 over the $2.07 per security in the corresponding period in 2017. Investment properties held increased by 8.5% from $ 2,144.8 million to $2,327.3 million in 1HFY18. The company ended the year with $33.8 million in cash over the $119 million in the corresponding period in 2017.



Meanwhile, the share price of the company has risen 3.27% in the past six months as on 17 December 2018, and it is trading towards a higher level. Based on foregoing and current stock performance we maintain our “Expensive” recommendation on the stock at current market price $2.190, considering all positive developments have been discounted at the current market price.
 

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