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National Storage share price edges lower following half year results release

The National Storage REIT (ASX: NSR) share price has edged lower on Wednesday following the release of its half year results.

The self-storage giant’s shares are down 0.4% to $2.38 this afternoon. This compares favourably to the 2.5% decline by the ASX 200.

What happened in the first half?

For the six months ended December 31, National Storage reported total revenue growth of 17% to $85.4 million. This was the result of an 18% lift in Storage revenue to $78.2 million, a 6% rise in Goods and Services revenue to $3.7 million, and a 21% increase in Other revenue to $3.5 million.

First half underlying earnings came in at $34.5 million, which was up 31% on the prior corresponding period. On a per share basis, underlying earnings rose 4.8% to 4.4 cents per share.

The National Storage board declared a distribution of 4.7 cents per share for the period.

Key metrics.

At the of December the company’s gearing stood at 36%. This is within its target range of 25% and 40%, and comfortably lower than its covenant of 55%.

During the period, the company saw its total assets under management increase 17% to $2.29 billion. Also growing at a solid rate was its net tangible assets, which lifted 9% to $1.772 per stapled security.

National Storage’s occupancy softened slightly in Australia, but its overall occupancy rate increased 0.3% to 82.4%.

Management commentary.

The company’s managing director, Andrew Catsoulis, was pleased with the half.

He said: “These results are testament to the strength of the underlying assets comprising our 180+ centre portfolio and reflect the resilience and quality of the management platform supporting our storage businesses across Australia and New Zealand. Our centres have delivered a solid performance despite challenging economic conditions being experienced in a number of key markets.”

“Our ongoing successful acquisition and development strategy combined with a number of recent enhancements to our existing operational platform will allow us to continue to grow revenue and improve profitability well into the future,” he added.

Outlook.

Management advised that it continues to target earnings per share growth of 4% and underlying earnings of $78 million in FY 2020. This assumes no material changes in market conditions.

However, it notes that current takeover discussions may impact the timing of revenue related to new developments, joint venture arrangements, and acquisitions.

Each of Gaw Capital Partners, Warburg Pincus, and Public Storage are currently conducting non-exclusive due diligence. All parties remain in discussions with management and their advisors in relation to their respective proposals.

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Motley Fool contributor James Mickleboro 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.