Bullboard - Stock Discussion Forum Storagevault Canada Inc SVAUF

Primary Symbol: T.SVI Alternate Symbol(s): T.SVI.DB.B | T.SVI.DB | T.SVI.DB.C

StorageVault Canada Inc. is a Canada-based storage company. The Company's primary business is owning, managing and renting self-storage and portable storage space to individuals and commercial customers. It operates three business segments: self storage, portable storage and management fees. It is represented regionally under the various brands: Access Storage, Sentinel Storage, Depotium Mini... see more

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TSX:SVI - Post Discussion

Storagevault Canada Inc > TD

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Post by retiredcf on May 13, 2022 8:41am

TD

Have an $8.50 target. GLTA

StorageVault Canada Inc.

(SVI-T) C$5.75

SVI Announces Acquisition of 7 Stores for $171.6mm Event

StorageVault announced that it has entered into separate agreements with seven vendors (six are arm's length) to acquire seven stores for $171.6mm (~9% of asset value).

Impact: SLIGHTLY POSITIVE

Despite increasing competition for the asset class, SVI continues to successfully source acquisitions in its core market of Ontario. The company has agreed to acquire six assets in Ontario, including four in the "core GTA." SVI will also acquire one store in Alberta. We note that one of the acquisitions totalling $14.0mm is a related party transaction with Access Storage (currently managed by SVI). We see earnings upside for the six stores not currently managed by the company as they are onboarded onto its revenue management system. Closing is expected in Q2 and Q3. We estimate an overall cap rate in the 5% range, with the core GTA stores likely sub-5%.

We had included $75mm of unannounced acquisitions in our 2022 forecast, although we are not surprised that the company surpassed this given its track record of exceeding its internal acquisition forecasts. With this announcement, 2022 acquisition activity now totals $216.6mm for eight stores and compares to its 2021 total of $270.2mm. Pro forma SVI will own 204 stores and manage 236.

The $171.6mm purchase price will be funded by $5mm in SVI shares to the related party based on an agreed upon VWAP ending three days prior to closing, with the remainder to be satisfied with cash on hand, new mortgage financing and the assumption of existing mortgages. With a Q1 ND/GAV of 39.9% (our calculation), we do not believe SVI needs to issue additional equity to fund these transactions.

SVI is currently trading at a 7.1 multiple point premium to its U.S. storage peers on 2022E AFFO but only 3.5 points ahead on 2023E AFFO, reflecting its stronger growth outlook. We believe the current premium is justified given SVI's superior earnings growth potential. On P/NAV, SVI trades at a 1% discount, versus the U.S. peers at an average discount of 17%..

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