The National Storage REIT (ASX: NSR) share price has fallen in early trade as the Aussie group reported a softer statutory result amid challenging market conditions.
What did National Storage REIT announce?
The Aussie real estate investment trust (REIT) reported Australian equivalent to IFRS (A-IFRS) profit down 1.0% on FY18 to $144.8 million despite underlying earnings surging 21.4% higher to $62.4 million.
For the year ended 30 June 2019 (FY19), National Storage reported a total return of 15% with an Australian portfolio occupancy rate of 81.4%, up 100 basis points (bps) from the prior corresponding period (pcp).
Total revenue for the Aussie REIT climbed 12% higher to $152.2 million as the self-storage group saw operating margins expand 500 bps to 59%.
National Storage reported a significant jump in its cash holdings, climbing $157.5 million to $178.8 million at year-end, as its total net assets surged 46.5% to $1,304.3 million or $1.63 net tangible assets (NTA) per share.
What were the biggest drivers of the result?
The surge in net assets was helped by the Aussie REIT’s $345 million equity raise during the period, while the Australian Portfolio revenue per available square metre (REVPAM) edged higher on FY18 performance.
Despite management citing challenging economic conditions in some regions, occupancy in the Australian portfolio came in at 81.4%, up 1.1% on pcp, while National Storage’s New Zealand portfolio occupancy was at 85.7%, up 1.0% on pcp.
The Aussie REIT added 9 acquisitions to its New Zealand portfolio throughout the year for a total of NZ$144 million, while it continues to focus on acquisition and development in Australia.
National Storage said its $100 million-plus acquisition pipeline remains strong for FY20 and beyond while enjoying a successful start to the new financial year.
Other focus areas for the Aussie REIT are its continued New Zealand expansion, accelerating the existing development pipeline and the development of new and ongoing joint venture (JV) arrangements.
National Storage said it is targeting FY20 distribution guidance of greater than 4% growth per stapled security (10.0 cents per security) with underlying earnings of greater than $78 million.
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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended National Storage REIT. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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