National Storage REIT

Reduced gearing levels and focusing on continued growth: National Storage REIT (ASX: NSR) is a real estate investment trust that focuses on the self-storage assets and has decent dividend yield of around 5.82%. NSR had declared the final distribution of 4.9 cps bringing total FY18 distribution to 9.6 cps. Since 1 July 2018, the company had settled, contracted or signed into exclusive due diligence for six assets, with a total NLA of 29,800sqm for $57 million. NSR currently has approximately $100 million of acquisition opportunities under active consideration. Currently there are 10 development and expansion projects that are underway and at various stages of completion. The company has recently successfully raised $175 million, comprising a $50 million Institutional Placement, and a $125 million pro-rata accelerated non-renounceable Entitlement Offer (including both institutional and retail). The company will use the funds raised to strengthen the company’s balance sheet, reducing the gearing levels to 30% from 38%, and also to offer longer-term funding flexibility for its consolidation strategy and pursue further growth through the identified strategic initiatives. During FY18, NSR settled $155 million in high quality assets across Australia and New Zealand, increased the total assets under management by 23% to $1.4 billion, and reaffirmed their position as the largest self-storage owner-operator in Australasia. Additionally, for FY 19, NSR expects EPS to be in the range of 9.6 - 9.9 cps and FY19 underlying earnings to be in the range of $62.5 – $64.5 million. Meanwhile, the stock is trading at the price of level $1.63, has resistance at $1.77 and support at $1.53. NSR stock has fallen 3.88% in three months as on October 10, 2018. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price given the dividend stream and potential going forward.
 

WAM Capital Limited

Extended Takeover offer by one more week for Wealth Defender Equities Limited: WAM Capital Limited (ASX: WAM), a leading LIC run by Wilson Asset Management, saw its stock rising by 5.46% in three months as on October 10, 2018 after the company announced an off-market takeover offer for Wealth Defender Equities Limited, which is at a 15% premium to its last traded share price. WAM has recently extended its Offer to WDE Shareholders by one more week and the Offer Period is until 21st October 2018. WAM Capital shareholders are expected to benefit from realising all or part of WAM’s 16.27% holding of Wealth Defender shares that were purchased at a discount to the pre-tax NTA. In addition, the all-scrip offer allows WAM shareholders to benefit from new shares issued at a premium to the WAM pre-tax NTA. Meanwhile, WAM stock is trading at the price of level $2.48, has resistance at $2.51 and support at $2.43. WAM stock is trading at a reasonable P/E of 13.01x. The long term profile with good portfolio return and high dividend yield (6.18%) makes WAM a good stock choice to have. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price.
 
 

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