Storage King Guides FY27 Distribution Down to 4.50cps

Storage King Group (ASX:SKG) reported a statutory profit of $154.3 million for the year ended 30 June 2026 and a distribution of 6.20 cents per security. Funds from operations were $82.1 million, down 3.4% on FY25. Total assets were $3.9 billion, up 8.1%, net tangible assets were $1.77 per security, up 1.7%, and the weighted average capitalisation rate was 5.42%, three basis points lower than FY25. Across the established portfolio, which the group defines as 103 mature stores trading since 1 July 2024 measured on a 12-month average by area and excluding one store with mixed site use, total RevPAM was $341 per square metre, up 0.7%. Australian RevPAM was $348psm, up 2.7%, while New Zealand RevPAM was A$295psm, down 11.7%, which the group attributed to foreign exchange and a weaker New Zealand economy, amplified by capital works completed in May 2026. Total occupancy was 90.2%, down 100 basis points, which the group said held up notwithstanding elevated discounting and increased competition for new customers across the sector, and the total rental rate was $378psm, up 1.3%. Separately, the group said it maintained operating and expense discipline, holding margins stable at 62%; the release does not state the margin base. Gearing was 33.7%, within the 25% to 40% target range, with approximately $400 million of additional gearing capacity measured to the 40% top of that range. The FY26 average cost of debt was 3.1%, or 4.2% including capitalised interest expense, which the group attributed to favourable historical hedges that are now progressively rolling off.

Storage King completed the internalisation of its management platform from Abacus Group on 30 June 2026, moving from an externally managed structure to a fully integrated operating model. As announced on 18 May 2026, the transaction is expected to be approximately 6% accretive to funds from operations per security on a pro forma annualised basis, driven by approximately $7 million of annualised cost savings; the group notes a portion of the gross management fee saving relates to capitalised development fees that reduce future capital expenditure but do not flow directly through FFO. During the year the group opened four developed stores and completed five expansions comprising about 34,500 square metres of net lettable area, adding 5% to the portfolio, and acquired three trading stores of about 10,000 square metres for total consideration of about $55 million and three development sites for about $23 million. Its proprietary revenue management system is active across all owned stores. The development pipeline covers 16 stores planned for delivery over the medium term, adding approximately 110,000 square metres of net lettable area, plus 23,000 square metres planned from expansions. FY27 distribution guidance is 4.50 cents per security, against the 6.20 cents distributed in FY26, with the payout ratio range widened to 80% to 100% of FFO, which the group said reflects interest headwinds and the retention of earnings for reinvestment in the growth pipeline. Chief Financial Officer Evan Goodridge said FY27 will see higher net finance costs as hedges roll off, drawn debt increases to fund the growth pipeline and capitalised interest comes online from stabilising developments. Guidance assumes no material deterioration in prevailing operating conditions.