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National Storage REIT

ASX:NSR
Snowflake Description

Reasonable growth potential second-rate dividend payer.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
NSR
ASX
A$797M
Market Cap
  1. Equity Real Estate Investment Trusts (REITs)
Company description

National Storage REIT engages in the ownership and operation of self-storage centers in Australia and New Zealand. More info.


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3 Month History
NSR
Industry
5yr Volatility vs Market

Value

 Is National Storage REIT undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of National Storage REIT to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

Current Discount
Amount off the current price National Storage REIT is available for.
Intrinsic value
1%
Share price is A$1.55 vs Future cash flow value of A$1.56
Current Discount Checks
For National Storage REIT to be considered undervalued it must be available for at least 20% below the current price. Less than 40% is even better.
  • National Storage REIT's share price is below the future cash flow value, but not at a moderate discount (< 20%).
  • National Storage REIT's share price is below the future cash flow value, but not at a substantial discount (< 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for National Storage REIT's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are National Storage REIT's earnings available for a low price, and how does this compare to other companies in the same industry?
  • National Storage REIT is overvalued based on earnings compared to the AU Equity Real Estate Investment Trusts (REITs) industry average.
  • National Storage REIT is overvalued based on earnings compared to the AU market.
Price based on expected Growth
Does National Storage REIT's expected growth come at a high price?
  • National Storage REIT is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on National Storage REIT's assets?
  • National Storage REIT is overvalued based on assets compared to the AU Equity Real Estate Investment Trusts (REITs) industry average.
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Value checks
We assess National Storage REIT's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Equity Real Estate Investment Trusts (REITs) industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Equity Real Estate Investment Trusts (REITs) industry average (and greater than 0)? (1 check)
  5. National Storage REIT has a total score of 0/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (653.14%).

    Full details on the Value part of the Simply Wall St company analysis model.
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Discounted cash flow (2 Stage Free Cash Flow to Equity using Funds From Operations)

The calculations below outline how an intrinsic value for National Storage REIT is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

National Storage REIT is a Real Estate Investment Trust (REIT), we use funds from operations (FFO) or adjusted funds from operations (AFFO) instead of levered free cash flow for REITs. This excludes depreciation and borrowing. Ideally analysts estimates of AFFO are used, where these aren't available we use FFO.

5 year cash flow forecast

Present value of next 5 years cash flows:
A$158

Terminal Value

Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = A$55 × (1 + 2.76%) ÷ (8.55% – 2.76%)

Terminal value based on the Perpetuity Method where growth (g) = 2.76%:
A$978

Present value of terminal value:
A$649

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
A$806 = A$158 + A$649

Value = Total value / Shares Outstanding (A$806 / 516)

Discount to Share Price

Value per share:
A$1.56

Current discount (share price of A$1.55): 1.12%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 8.55% = 2.76% + (0.8 * 7.24%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value (A$797,469,794).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

0.657 = 0.417 (1 + (1- 30%) (81.95%))

Levered Beta used in calculation = 0.8



Assumptions
  1. The risk free rate of 2.76% is from the 10 year government bond rate in AUD.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (7.24%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is National Storage REIT expected to perform in the next 1 to 3 years based on estimates from 6 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
69.8%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is National Storage REIT expected to grow at an attractive rate?
  • National Storage REIT's earnings growth is expected to exceed the low risk savings rate of 4.1%.
Growth vs Market Checks
  • National Storage REIT's earnings growth is expected to exceed the AU market average.
  • National Storage REIT's revenue growth is expected to exceed the AU market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • National Storage REIT's earnings are expected to grow significantly at over 20% yearly.
  • National Storage REIT's revenue is expected to grow by 4.9% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • National Storage REIT is not expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be below 20%.

Improvement & Relative to industry
  • Performance (ROE) is expected to be below the current AU Equity Real Estate Investment Trusts (REITs) industry average.
  • A decline in National Storage REIT's performance (ROE) is expected over the next 3 years.
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Future performance checks
We assess National Storage REIT's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the AU market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the AU market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
National Storage REIT has a total score of 4/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has National Storage REIT performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare National Storage REIT's growth in the last year to its industry (Equity Real Estate Investment Trusts (REITs)).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • National Storage REIT's year on year earnings growth rate has been positive on average over the past 5 years.
  • National Storage REIT has been loss making last year but is now profitable.
  • National Storage REIT has become profitable in the last year making it difficult to compare the industry average.
Earnings and Revenue History
National Storage REIT's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Poor return on shareholders funds (ROE < 20%) last year.
  • National Storage REIT performed worse than the AU Equity Real Estate Investment Trusts (REITs) industry average based on Return on Assets (ROA) last year.
  • Performance based on Return on Capital Employed (ROCE) is broadly the same over 3 years.
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Past performance checks
We assess National Storage REIT's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Equity Real Estate Investment Trusts (REITs) industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
National Storage REIT has a total score of 2/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is National Storage REIT's financial position? (This company is analysed differently as a bank or financial institution)

This company is a bank or financial institution.

Fundamentally a bank's business is based upon borrowing and lending money, for this reason they typically have high levels of debt and we analyse them differently.
Net Worth
Balance sheet
This treemap shows a more detailed breakdown of National Storage REIT's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
BANK ANALYSIS

This company is a bank or financial institution, which is analysed accordingly below.

Below we check the amount of loans the bank has, how many of those are bad, and its ability to cover any bad loans.
  • No loans data.
  • No deposits or liabilities data.
  • Reports no customer deposits, loans are made up entirely of borrowed funds.
  • National Storage REIT's level of assets compared to its equity is low (i.e. an appropriate level of borrowing to fund lending).
  • No data on allowance for non-performing loans.
  • No data on bad loans.
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Financial health checks
We assess National Storage REIT's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. National Storage REIT has a total score of 1/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is National Storage REIT's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
5.96%
Current annual income from National Storage REIT dividends. Estimated to be 6.59% next year.
If you bought A$2,000 of National Storage REIT shares you are expected to receive A$1 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Paying above low risk savings rate (3%).
  • Paying above markets top dividend payers (4.92%).
Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Whilst dividend payments have been stable, National Storage REIT has been paying a dividend for less than 10 years.
  • Dividend payments have increased, but National Storage REIT only paid a dividend in the past 3 years.
Current Payout to shareholders
What portion of National Storage REIT's earnings are paid to the shareholders as a dividend.
  • Dividends paid are not well covered by net profit (0.2x coverage).
Future Payout to shareholders
  • Dividends after 3 years are expected to be covered by net profit (1x coverage).
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Income/ dividend checks
We assess National Storage REIT's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can National Storage REIT afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. National Storage REIT has a total score of 3/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of National Storage REIT's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Andrew Catsoulis, image provided by Google.
Andrew Catsoulis
COMPENSATION A$1,144,492
CEO Bio

Mr. Andrew Catsoulis serves as the Managing Director of National Storage Holdings Limited at National Storage REIT. Mr. Catsoulis serves as Company Secretary of Stowaway Self Storage Pty Ltd. He is a qualified finance, commercial and property lawyer who has worked for major law firm both in Australia and overseas. He is also a qualified project manager with considerable property development experience. He has over 18 years of specific self-storage industry expertise in areas of acquisition, development, integration and operation of 'greenfield' and developed self-storage centres. He was instrumen in the successful acquisition and integration of the original National Storage Group portfolio. He serves as Director at Stowaway Self Storage Pty Ltd, Storcat Pty Ltd., NS Saleco Pty Ltd and National Storage REIT. He has been a Director of National Storage Holdings Limited since November 1, 2013.

CEO Compensation
  • Andrew's compensation has increased in line with National Storage REIT has become profitable.
  • Andrew's compensation is higher than average for a company of this size and profit level.
Management Team Tenure

Average tenure of the National Storage REIT management team in years:

4.5
Average Tenure
  • The tenure for the National Storage REIT management team is about average.
Management Team

Andrew Catsoulis

TITLE
MD & Director of National Storage Holdings Ltd
COMPENSATION
A$1M

Stuart Owen

TITLE
Chief Financial Officer of National Storage Holdings Limited
COMPENSATION
A$515K
TENURE
3.1 yrs

Peter Greer

TITLE
Chief Operating Officer of National Storage Holdings Limited
COMPENSATION
A$991K

Pat Rogers

TITLE
General Counsel
COMPENSATION
A$372K

Claire Fidler

TITLE
Company Secretary & Executive Director of National Storage Holdings Ltd
COMPENSATION
A$214K
TENURE
2 yrs

Makala Castelli

TITLE
General Manager of Marketing & Corporate - National Storage Holdings Limited
TENURE
0.9 yrs

Kristy Rosborough

TITLE
Legal Counsel of National Storage Holdings Limited
TENURE
11.8 yrs
Board of Directors Tenure

Average tenure of the National Storage REIT board of directors in years:

2.9
Average Tenure
  • The average tenure for the National Storage REIT board of directors is less than 3 years, this suggests a new board.
Board of Directors

Laurence Brindle

TITLE
Independent Non-Executive Chairman of National Storage Holdings Limited
COMPENSATION
A$251K

Andrew Catsoulis

TITLE
MD & Director of National Storage Holdings Ltd
COMPENSATION
A$1M
TENURE
4 yrs

Claire Fidler

TITLE
Company Secretary & Executive Director of National Storage Holdings Ltd
COMPENSATION
A$214K
TENURE
0.3 yrs

Anthony Keane

TITLE
Independent Non-Executive Director of National Storage Holdings Limited
COMPENSATION
A$125K
TENURE
4 yrs

Howard Brenchley

TITLE
Independent Non-Executive Director of National Storage Holdings Limited
COMPENSATION
A$108K
TENURE
3 yrs

Steve Leigh

TITLE
Independent Non-Executive Director of National Storage Holdings Limited
COMPENSATION
A$104K
TENURE
3 yrs
Recent Insider Trading
  • National Storage REIT insiders have sold more shares than they have bought in the past 3 months.
Who owns this company?
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Management checks
We assess National Storage REIT's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. National Storage REIT has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

Company News

Company Info

Map
Description

National Storage REIT engages in the ownership and operation of self-storage centers in Australia and New Zealand. The company owns and operates 116 self-storage centers; and manages 65,000 storage units through 622,000 square meters of net lettable area. It offers business storage, records management, climate controlled wine storage, vehicle storage, vehicle and trailer hiring, packaging, insurance, and other value added services. The company provides its solutions to approximately 40,000 residential and commercial customers. National Storage REIT is headquartered in Brisbane, Australia.

Details
Name: National Storage REIT
Ticker: NSR
Exchange: ASX
Founded:
Market Cap: A$797,469,794
Shares outstanding: 516,161,679
Website: http://www.nationalstorageinvest.com.au
Address: National Storage REIT
71 Eagle Street,
Level 23,
Brisbane,
Queensland, 4000,
Australia
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
ASX NSR Staple Securities Australian Securities Exchange AU AUD 19. Dec 2013
Number of employees
Current staff
Staff numbers
0
National Storage REIT employees.
Industry
Industry: Specialized REITs
Sector: Real Estate