Storagevault Canada Inc SVAUF

RBC

[retiredcf]

Their upside scenario target is $9.25. GLTA

July 27, 2022

StorageVault Canada Inc.
Strong Q2: FFO/share +29% y/y, far outpacing inflation

TSX: SVI | CAD 6.19 | Outperform | Price Target CAD 8.00

Sentiment: Positive

First Look: StorageVault Canada Inc. (“SVI”) reported a strong quarter with FFO/share (excl’ acquisition costs) of $0.058, +29% y/y, vs. RBC/consensus of $0.051/$0.05. The 14% beat came from higher NOI, with SP NOI growth of 14% vs. a tough comp last year. Current pace of growth is far outpacing inflation. While we believe the outsized SP NOI growth (partly covid-induced) should normalize to the mid to high single digit level at some point, current google trend search for storage would suggest that elevated demand could continue in the near term.

Key points:

• SP NOI growth (self storage): +13.6% (Rev +13.4%, Exp +12.7%); Growth is being driven by continued revenue management and higher occupancy. Opex pressures came from advertising, property taxes and wages. While the pace of growth has decelerated from 18% in Q1, the quarter is lapping a tough comp a year ago (Q2/21 NOI +25%)

• SP NOI margin (self storage): 72% (flat y/y). New store NOI margin was 60%, where we see upside as the acquisitions are integrated into the SVI platform and program.

• Capital allocation: SVI completed the acquisition of 6 stores for $169m (one related party), funded with $5m shares (at ~$6.14 per share), and the remainder with a promissory note and mortgage financing. YTD acquisitions total $214m. SVI remains active on the NCIB having acquired $6.4m at an average price of $5.75/share YTD.

• Dividend increase: as previously announced, quarterly dividend was increased modestly by 0.5% to $0.0028/share

• Leverage: Net debt/annualized EBITDA 10.5x vs. 11x last year. Average cost of debt stood at 4.2% with an average term of 3.84 years (excluding lines of credit).