National Storage REIT (ASX: NSR) could be a dividend share to follow, particularly after its latest update to the market.
What is National Storage REIT?
National Storage is real estate investment trust (REIT). It owns a portfolio of self-storage unit properties across Australia and New Zealand. It’s the largest provider across the two countries with 211 centres and 80,000 residential and commercial customers.
What happened today?
In an update today, the REIT highlighted strong market conditions and ongoing portfolio optimisation that continue to drive business performance.
It is seeing record occupancy across Australia and New Zealand of 86.7% as at 30 April 2021, up from 77.6% at 30 June 2020. Occupied net lettable area has increased 111,000m2 since 30 June 2020, excluding FY21 acquisitions.
Revenue per available square metre (REVPAM) increased 21.5% from $188 per square metre at 30 June 2020, up to $229 per square metre at April 2021. At December 2020 it was $212 per square metre.
In FY21 to date, the business has made acquisitions that totalled $373 million.
National Storage said it’s increasing its focus on the development pipeline and expansion projects to provide long term enhanced revenue and net tangible assets (NTA) growth.
Capital raising
National Storage revealed a fully underwritten accelerated non-renounceable entitlement offer to raise approximately $325 million to strengthen the balance sheet, replenish its investment capacity and provide additional funding flexibility.
The offer is a 1 for 6.27 raising, at a price of $2, which is a 3.8% discount to the last closing price.
This will reduce pro forma gearing from approximately 35% to 24% and pro forma NTA will increase to $1.74 per share.
Guidance
National Storage upgraded its FY21 underlying profit / earnings per share (EPS) guidance to a range of 8.5 cents to 8.6 cents, up from 8.1 cents to 8.5 cents.
It also provided preliminary guidance of at least 8% in FY22.
Why National Storage could be a good ASX dividend share
National Storage has a high distribution payout ratio, so investors receive most of the cashflow each year.
Using CommSec’s estimated distribution of 8 cents per unit in FY21, National Storage offers a potential yield of 3.85% this year. That’s not a very high yield, but it’s not bad in this environment. National Storage can continue to increase its occupancy rate, charge more per square metre and acquire/open new facilities. That can all help the profit and distribution increase.
There are also other ASX dividend shares that could be options for income growth.
