Stor-Age Property REIT (JSE:SSS) News - Acquisition of UK portfolio and withdrawal of Cautionary Announcement Stor-Age Property REIT Limited Incorporated in the Republic of South Africa Registration number 2015/168454/06 Share code: SSS ISIN ZAE000208963 (Approved as a REIT by the JSE) (“Stor-Age” or the “Company”) ACQUISITION OF UK PORTFOLIO AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT 1 INTRODUCTION Further to the cautionary announcement published on SENS on Thursday, 20 January 2022 shareholders are advised that the board of directors of Stor-Age (the “Board”) is pleased to announce that Stor-Age, through its wholly-owned subsidiary, Betterstore Self Storage Properties I Limited (“Betterstore”), has concluded an agreement with Michael and Margaret McCarthy (the “Sellers”), in terms of which Betterstore will acquire 100% of the issued share capital of a newly formed company holding four freehold properties (the “Acquisition”), for a purchase consideration of £37.5 million (the “Purchase Price”). 2 TERMS OF THE ACQUISITION 2.1 The sale and purchase agreement for the Acquisition was signed on 27 January 2022, with an effective date of 31 January 2022 and is conditional on the following outstanding conditions precedent: 2.1.1 The Sellers’ restructure has been completed in all respects in accordance with the sale and purchase agreement (“SPA”) 2.1.2 The release of all existing encumbrances registered against the properties and the Seller’s business, assets and subsidiary (as defined in the SPA) 2.2 The Purchase Price will be settled in cash, using available cash and debt funding. 2.3 The Sellers have provided warranties and indemnities that are customary for a transaction of this nature. 3 PROPERTY SPECIFIC INFORMATION Details of the properties are set out in the table below: Weighted Gross Maximum average Property Property lettable lettable Geographic location annual valuation name area area (sqf) (sqf) rental rate (£000) per sqf McCarthy’s Water Lane, York, Storage World, 33 686 45 686 £18.24 8 970 YO39 6PQ York McCarthy’s Ripon Road, Harrogate. Storage World, 41 789 41 789 £26.88 12 670 HG1 2BS Harrogate McCarthy’s Leeds Road, Storage World, 27 233 77 233 £17.28 9 270 Huddersfield, HD1 6NE Huddersfield McCarthy’s Kirkgate, Wakefield, Storage World, 29 463 38 763 £17.52 6 730 WF1 1UW Wakefield Total 132 171 203 471 37 640 Notes 1. All properties are classified as self storage and are held on a freehold basis. 2. The total Purchase Price is considered to be in line with the fair market value of the properties as set out above, determined by an external valuation performed by Cushman & Wakefield (Registered Valuers of The Royal Institution of Chartered Surveyors in the UK), as at 20 January 2022, for the purposes of debt funding relating to the Acquisition. 3. Weighted average rental rate per sqf is quoted on an annual basis 4. sqf – square foot 4 FINANCIAL INFORMATION Set out below is the forecast income, net operating income and earnings after tax in respect of the Acquisitions (the “Forecast”) for the two months ending 31 March 2022 and the year ending 31 March 2023 (the “Forecast Period”). The Forecast has been prepared on the assumption that the Acquisition is effective on 1 February 2022. The Forecast, including the assumptions on which it is based and the financial information from which it has been prepared, is the responsibility of the directors of the Company. The Forecast has not been reviewed or reported on by independent reporting accountants. The Forecast presented in the table below has been prepared in accordance with the Company’s accounting policies, which are in compliance with International Financial Reporting Standards. Forecast for the Forecast for the two months ending year ending 31 March 2022 31 March 2023 R’000 R’000 Rental income – self storage 8 461 54 258 Rental income – other 1 260 7 920 Ancillary income 1 340 8 557 Total income 11 061 70 735 Direct operating costs (2 835) (17 894) Net operating income 8 226 52 841 Finance costs (2 109) (13 254) Earnings before UK corporations tax 6 117 39 587 Tax (917) (5 938) Earnings after tax 5 200 33 649 The Forecast incorporates the following material assumptions in respect of income and operating costs: 1. The Forecast is based on information derived from management accounts, budgets and lease agreements in respect of the Acquisition. 2. Analysis of contractual nature of rental income: Forecast for the Forecast for the two months ending year ending 31 March 2022 31 March 2023 % contracted rental income 56.6 12.9 % near contracted rental income 37.4 75.0 % uncontracted rental income 6.0 12.1 Total 100.0 100.0 3. The self storage lease agreements are month-to-month and may be terminated by a customer on providing two weeks’ notice. In determining the Forecast, management has assumed that the properties exhibit similar levels of tenant churn based on historical performance and experience from similar properties. 4. No fair value adjustments and no depreciation are recognised in the Forecast Period. 5. There are no unforeseen economic factors that will affect the ability of customers to meet their commitments in terms of existing lease agreements. The Forecast assumes bad debts of 0.5% of rental income. 6. The Forecast assumes a loan-to-value ratio of 50.0% throughout the Forecast Period. UK debt funding of GBP19.125 million, and an interest rate of 3.15% has been assumed, being the estimated cost of debt funding for the Acquisition. 7. A GBP:ZAR exchange rate of ZAR21.00 has been assumed for the two months ending 31 March 2022 and a GBP:ZAR exchange rate of ZAR22.00 has been assumed for the year ending 31 March 2023. 5 CATEGORISATION The Acquisition is classified as a category 2 transaction in terms of the JSE Listings Requirements and is not subject to approval by shareholders. 6 WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT Following the release of this announcement Stor-Age shareholders are advised that they are no longer required to exercise caution when dealing in their Stor-Age shares. The rationale for the acquisition and dividend guidance, as disclosed in the cautionary announcement, remain unchanged. Johannesburg 28 January 2022 Transaction Advisor and Sponsor Investec Bank Limited Date: 28-01-2022 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 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