StorageVault Canada Inc.
(SVI-V) C$4.49
Results in Line; Self-Storage SPNOI Accelerates to +11.8%
Event
Q1/21 results and forecast update.
Impact: NEUTRAL
StorageVault reported Q1/21 FFO/share (f.d.) of $0.024, +8% versus Q1/20 but
below our estimate of $0.028. More importantly, AFFO/share (our calculation), which
excludes the impact of $1.4 million of acquisition/integration costs, was $0.024,
largely in line with our $0.025 estimate. A small miss on NOI (related to the Q4
acquisition which carried a large amount of lease up properties) and higher-thanexpected interest was offset by lower G&A. As expected, SVI also announced a 0.5%
increase in its dividend.
StorageVault's self-storage portfolio continues to demonstrate its resilience
through the pandemic, recording SPNOI growth of 11.8%, the highest level
since Q2/17. The company continues to see a significant increase in leads and
rentals thus far in 2021, which has driven higher occupancies and rental rates, and
is now translating into outsized SPNOI growth. While costs were up ~8% y/y, the
corporation still achieved an 80bps improvement in its SPNOI margin to 67.2%. In
April, SVI announced the launch of FlexSpace Logistics, a last-mile, end-to-end,
third-party logistics (3PL) platform that offers storage space, logistics, and inventory
management services (link). We expect this venture to nicely compliment its existing
business, although we do not anticipate any meaningful contribution in the near-term.
Acquisitions. SVI has remained active on the acquisition front. YTD, SVI has
acquired/agreed to acquire 17 stores for ~$130 million, including eight in Ontario
(link). This is nicely ahead of the full-year guidance of $100 million. Management has
proven its ability as an effective consolidator, and we expect momentum to continue
through the balance of the year. We have included $70 million of unannounced
acquisitions in 2021 and $75 million in 2022.
Forecast. Our 2021 AFFO/share estimate is largely unchanged while 2022 is +2%.
Our $3.70 NAV/share estimate is +3%.
TD Investment Conclusion
StorageVault continues to generate strong earnings and NAV growth on the
back of solid industry fundamentals and strong execution by its management
team. We are increasing our target price to $5.00 but maintaining our HOLD
recommendation