Abacus Storage King (ASK) Earnings Call Transcript & Summary

My name is John O'Sullivan, and I'm the Chair and Independent Non-Executive Director of Abacus Storage King. On behalf of the Board of Directors, it's my pleasure to welcome you to the Annual General Meeting of Abacus Storage King securityholders . I will chair today's meeting, which is being recorded. This meeting has been convened in accordance with the Corporations Act. As it is past the appointed time of 11:00 am, the quorum of securityholders is present. I declare the meeting open. This meeting comprises the Annual General Meetings of the members of Abacus Storage Operations Limited in conjunction with the meeting of the members of Abacus Storage Property Trust. I'm joined today by my fellow Abacus Storage King Directors. Moving from my left, Steven Sewell, our CEO; on Steven's left, Sally Herman, Independent Non-Executive Director and Chair of the Audit and Risk Committee and a member of the Remuneration and Nomination Committees. On Sally's left, Karen Robbins, an Independent Non-Executive Director, Chair of the Remuneration Committee and a member of the Audit and Risk Committee -- Audit and Risk and Nomination Committees; Mark Bloom, Non-Executive Director, member of the Audit and Risk Remuneration and Nomination Committees. Unfortunately, due to an unforeseen personal matter, our fund manager, Nikki Lawson, was unable to attend the meeting today, and Steven will provide the trading update later. We're also joined by members of the Abacus Group and Abacus Storage King management team and the Abacus Storage King's auditor, Jodie Inglis from Ernst & Young. Before we move to the formal voting on the resolutions, Steven and I will provide a brief overview of how the business performed in FY '25. Steven will also provide a first quarter trading update. There will be time for you to ask any questions in relation to the resolutions during the meeting and any other general questions you may have at the end of the meeting. As at 30 June 2025, Abacus Storage King comprised $3.6 billion in assets, representing an increase of 11.8% on FY '24. The group's portfolio spans over 1.2 million square meters of land across Australia and New Zealand with 204 operating stores, including 128 owned and managed stores and 76 licensed stores. Our store network is supported by a team of over 500 Storage King employees, and we proudly serve more than 75,000 customers annually through our physical network and digital platforms. Our vision is to be the undisputed leader in the self-storage industry, known for being the most respected, responsive and recognized owner, operator and manager. To support this vision, our strategy remains focused on delivering superior income and capital growth for securityholders through a high-quality, strategically located portfolio managed by the Storage King operating platform. We continue to drive performance through disciplined execution of our multipronged growth levers, acquisitions, developments and platform enhancements. In FY '25, we delivered funds from operations, FFO of $85 million, up 4.7% on FY '24 and a statutory profit of $289 million, up $150.8 million year-on-year. This strong result reflects the resilience of our diversified portfolio and the strength of the Storage King brand. We met our FY '25 guidance with a distribution of $0.062 per security, representing an FFO payout ratio of 95%, which is within our targeted range of 90% to 100%. During the period, Abacus Storage King released its second stand-alone sustainability report, outlining our ESG strategy built around 3 pillars: connect to people, care for the planet and commit to do the right thing. Through our sustainability road map, we aim to address both risks and opportunities that impact our ability to operate sustainably to create long-term value. Steven will speak more about our ESG highlights shortly. I should also mention at this point that we have been in discussion with our major security holder about the possibility of adding one more Ki Corp nominee to the Board. No decision has been made, but if and when we do make a decision, we will, of course, make the required announcements to the ASX. Before I hand over to Steven, I would like to thank the Board and management team for their dedication and our securityholders for their ongoing support.

Thanks, John, and thanks, everybody, for coming along. As reported in our FY '25 results, Abacus Storage King has had a very strong year, underpinned by sector-leading operating metrics. RevPAM revenue per available meter grew 4.5% year-on-year to $340 per square meter, driven by a 4.1% growth in rental rates and a modest occupancy rise to 91.2%. Our gearing of 29.3% sits at the lower end of our target range, and we maintain funding capacity of over $600 million, which gives us the flexibility to pursue the acquisitions, development and platform initiatives that we have underway. Following the withdrawal of the NBIO, we continue to focus on our multipronged growth strategy to expand net lettable area and importantly, enhance income returns. In FY '25, we acquired 6 operating stores and 4 development sites for $84 million. We delivered 3 new stores, Morayfield in Queensland, Darlington in South Australia and Leppington here in New South Wales. And we progressed the development of additional 17 stores, which will come on progressively over the next few years. These next-generation assets that we are building in prime metropolitan locations typically are expected to enhance average RevPAM across the portfolio over time, and it is pleasing to report that the lease-up of these new stores in FY '25 is tracking well ahead of internal forecasting, reflecting what we believe is the strength of our metropolitan focused strategy and also the favorable industry demand drivers, which I'll touch on in a minute. Our operating platform continues to lead the market. Storage King was the most Google searched self-storage brand in Australia in FY '25, which we believe is a strong indicator of future customer engagement. As I said, the self-storage sector continues to benefit from structural tailwinds, including urban densification, population growth, and expansion of e-commerce and also some housing movements turnover. Our portfolio continues to grow, supported by these demand drivers and the market-leading platform. We now manage 204 stores, as John mentioned, 128 that we own ourselves and 76 that are owned by other individuals, which positions us well for future growth. These structural demand drivers are supportive. However, I would say that the sector is not immune to cyclical pressures. Elevated cost of living conditions are weighing on discretionary spending. Housing turnover remains mixed across the various markets in which we operate. And in New Zealand, in particular, the macroeconomic environment is particularly challenging with interest rate pressure from sticky inflation and negative net migration trends almost for the first time in history, impacting consumer sentiment and mobility. Despite these headwinds, self-storage benefits from a range of diverse -- a diverse range of demand and supply drivers, which underpins the sector's resilience, we believe, over the medium to longer term. Turning to our sustainability initiatives. As John mentioned, in FY '25, we achieved 3% reduction in greenhouse gas emissions, supported by initiatives such as our solar installation, which is now up to almost 90 sites and increasing where we can green energy usage. We remain committed to our large team of people with initiatives focused on workplace well-being, personal development, professional development, supporting our team in driving an exceptional customer experience, which in turn drives superior returns for our security holders. We recognize our impact on stakeholders and are committed to managing it through our robust sustainability framework. In the first quarter, trading conditions across the portfolio have remained strong for the quarter ended 30 September. In our established portfolio, RevPAM of $340 per square meter, growth of 1.3% on the first quarter in last year and 0.6% growth on the FY '25 average. Encouragingly, RevPAM increased year-on-year across all Australian states with Queensland, the market-leading state at 4.3% positive, driven by also by strong occupancy and rental rate growth. Victoria and Western Australia had solid growth achieved through rental rate. And as I mentioned, in New Zealand, we proactively reduced rates by approximately 5% year-on-year to preserve occupancy, which fortunately still remains stable at about 90%. If we excluded the New Zealand impact for our established portfolio, the RevPAM growth would be 2% up on the prior corresponding quarter and 0.9% up on the fiscal year '25. Average rent per square meter in the established portfolio is up 1% on the prior quarter and 0.9% on the '25 average with all regions seeing rental growth except New Zealand. Occupancy remains a key leading indicator for future RevPAM growth, reflecting the strength of demand and also operational performance. Our established portfolio has delivered a sensational number of 90.8% in the first quarter, up slightly on the first quarter of last year, with New South Wales recording the highest occupancy at 92%, alongside the highest rental rate. Queensland and New South Wales, some of the biggest elements of our portfolio delivered the strongest year-on-year occupancy gains, while Victoria and WA had marginal declines, however, still had positive RevPAM growth in the period. Turning to our development pipeline. As I said, we have a lot of projects underway and 4 new stores expected and on track to deliver in FY '26, which will add 24,000 square meters of lettable area. Following the capital deployment into the development pipeline, post balance date settlements and the payment of the distributions, quarter end gearing was 31%, up slightly from the 29.3% at FY '25. This remains comfortably within the target range of 25% to 35% and limited -- with limited near-term maturities, we remain well positioned to support our strategic growth agenda. Looking ahead, our portfolio of well-located rightsized urban assets underpinned by the operating platform supports our confidence in the outlook. ASK reaffirms its FY '26 distribution guidance of $0.062 per security with the payout ratio expected to be within the range of 90% to 100% of FFO, subject to there being no more material deterioration in current trading conditions. In closing, I'd like to thank the entire team, both at Abacus and over at Storage King for their hard work and commitment, Board for their guidance and you, our security holders, for your continued support. I'll now hand back to John for the formal part of the meeting.

Thank you, Steven. This now brings us to the formal part of the meeting. The last Annual General Meeting for Abacus Storage King was held on 12th of November 2024. The minutes of that meeting were approved by the Board and signed by the Chair of that meeting in accordance with the provisions of Section 251A of the Corporations Act. The minutes are available for inspection at the registered office of the company should any member wish to view them. The Notice of Meeting was made available with personalized proxy forms to all registered members on or about 13 October 2025. The notice of meeting is taken as read. Voting on all resolutions will be conducted by poll. For the purposes of the poll, I appoint David Parkinson of Boardroom, Abacus Storage King's share registry, who has examined and prepared summaries of the proxy forms received to act as returning officer and to conduct the poll. The persons entitled to vote on this poll are all eligible securityholders, corporate representatives and attorneys of eligible security holders and proxy holders for eligible securityholders who hold green voting cards. If you are attending in more than one of those capacities, you will have been issued with as many voting cards as you have separate capabilities. If anyone believes they are entitled to vote on this poll in any capacity and does not have a green card in respect of voting, please raise your hand now and a member of our share registry team will assist you. At the appropriate time, I will ask that you mark your vote for the relevant resolution on the green voting card. If you are a security holder who is eligible to vote and wish to cast all your votes on a resolution, please place a mark in either the for, against or abstain box next to that resolution. If you are a proxy holder, a summary of the votes to which you are entitled has been attached to the voting card. If the summary of votes includes discretionary votes, these are yours to cast at your discretion. If you wish to cast the discretionary votes, please place a mark in the corresponding for, against or abstain boxes. If your summary of votes does not have any discretionary votes, you do not need to mark your voting card and will simply need to hand it to the returning officer at the end of the resolutions. After all resolutions have been read and voted upon, please place your voting card in one of the ballot boxes that will be circulating around the room. Are there any questions in relation to the poll process? There being no questions, I'll move on. Proxies have been inspected and all those validly lodged have been accepted. Proxies have been received representing approximately 1,192,935,990 securities or 90.78% of the issued capital of Abacus. All undirected proxies or open votes that have nominated the Chair of the meeting as their proxy have been cast in favor of each resolution in the Notice of Meeting and provided to the returning office. We will now proceed with the resolutions as set out in the Notice of Meeting. I will then open the floor for discussion and questions from security holders on each item of business. Should you wish to ask a question, please raise your green or yellow card and a microphone will be brought to you. After each resolution has been discussed, you will be asked to vote by way of a poll. The results of the meeting will be made available as soon as possible following conclusion of the meeting by Abacus Storage King releasing and announcement to the ASX. Before we proceed to the business of the meeting, up on the screen is the results from each of the major external proxy research reports. Now I move on to the first item of notified business, which is to consider 2025 annual financial report for Abacus Storage King. There will be no vote on this item, and it's a discussion item only. We have our auditors present to answer any questions relating to the conduct of the audit, the preparation and content of the independent report. Are there any questions or comments on the 2025 annual financial report? Are there any questions or comments on the management of the company generally? We did have one question from a shareholder. We're going to do that at the end. I'll now move on to the second item of business, which is the resolutions. Resolution #1 is to adopt the remuneration report, which is set out on Pages 12 to 17 of our 2025 annual financial report. The remuneration report outlines the key remuneration policies and practices for the year ended 30 June 2025, explains the link between remuneration and corporate performance. The proxies received in respect of this resolution are now being displayed on the screen. Are there any questions on this item? There being no questions, I now put the motion that the remuneration report be approved. Please mark your voting instruction for this resolution on your green voting card. I'll now move to the next item. As this item concerns my own reelection, I will ask Sally Herman to chair this part of the meeting.

Resolution 2 relates to the reelection of John O'Sullivan as a Director of Abacus Storage Operations Limited. John retires by rotation and in accordance with the constitution of the company and being eligible, offers himself for reelection. John is an Independent Non-executive Director, and you can see John's bio on screen now. The directors value the contribution of John and recommend voting in favor of the resolution. Proxies received in respect to this resolution are now being displayed on screen. Are there any questions on this item? I now put the motion that John O'Sullivan be elected as a director. Please mark your voting instruction for this resolution on your green voting card. I now hand back to John.

Thank you, Sally. Resolution 3 relates to the reelection of Karen Robbins as a Director of Abacus Storage King. Karen retires by rotation in accordance with the constitutions of the company and being eligible, offers herself for reelection. Karen is an Independent Non-executive Director, and you can see Karen's bio on the screen now. The directors value the contribution of Karen and recommend voting in favor of the resolution. Proxies received in respect of this resolution are now being displayed on the screen. Are there any questions on this item? There being no questions, I now put the motion that Karen Robbins be reelected as a director. Please mark your voting instruction for this resolution on your green voting card. That concludes the resolutions to be voted on today. As noted, we are conducting a poll on all resolutions, and I note the poll is now open. I now invite the staff of Boardroom to collect the voting cards. [Voting]

Has everybody who intended to vote submitted their cards? Yes. So I declare the poll closed. This concludes the notified business of the meeting. Before I open the meeting to a period of general questions, we received one question in advance of the AGM, which was post the NBIO, what direction plan does the Board have for moving forward? I'll pass to Steven to answer this.

Thanks, John. And as I said in my remarks, we've got gearing sitting at the lower end of our target range. So that maintains enormous funding capacity for acquisitions, developments and the investments we're making into the operating platform, and following the withdrawal of the NBIO, we do have a multipronged growth strategy to expand the size of the portfolio and particularly as it relates to technology to enhance the returns from that portfolio. In addition, we will continue to review the external management structure of the vehicle, always looking to make sure that it does best meet the needs of the company. Thanks, John.

Thanks, Steven. I'll now open the meeting for a period of general questions. Are there any general questions or comments? Is there any other business which may lawfully be brought forward to this meeting? There being no further business, I would like to thank all securityholders for their attendance, and I now declare the Abacus Storage King Annual General Meeting closed. Thank you for your time and consideration. Results of the poll will be announced to the ASX once they are available. Thank you.