Storage King's FY26 Reality Check: NZ Struggles, Aussie Strength & a $400M War Chest for What's Next

SKG is facing near-term challenges resulting in a decline in revenue, earnings, and cash flow. But they have done massive capex for future cash flow generation, improving the future outlook.

Storage King Group (ASX: SKG) 

Announced on 14 August 2026 its annual result of FY26 for the period ending in June 2026. SKG reported a decline in funds from operations (FFO) by 3.4% YoY to $82.1M and FFO per security down by 3.6% YoY to 6.25 cents per share. Total RevPAM grew by 0.7% to $341 psm. Australian RevPAM grew by 2.7% YoY to $348 psm, but New Zealand RevPAM declined massively by 11.7% YoY to $295 psm due to foreign exchange and a weaker New Zealand economy. The total occupancy declined by 100 bps YoY to 90.2%, and the rental rate increased by a modest rate of 1.3% YoY to $358 psm.

SKG reported an increase of 3.3% YoY to $236M, with storage revenue increasing to $223.6M, but leased tenancy and fee revenue remain flat and will not grow to $12.4M. Storage King's operating expenses increased by 4.9% YoY to $90.7M, resulting in operating profit growing only by 2.4% YoY to $145.3M, alongside delivering the same operating margin compared to last year of 62%. SKG reported a massive decline in the statutory profit by $134.7M to $154.3M, making it almost half compared to last year due to a massive flow of other income.

SKG reported a net cash flow from operating activities of $78.9M and did a massive pipeline expansion by acquiring three operating stores and three development sites valued at $78M. During the year, SKG reported an investment properties and capex of $259M, making a net decrease in cash and cash equivalents of $-7.9M compared to $30M last year.

SKG has reported a healthy balance sheet, despite earning difficulties and massive capex. Total assets increased by 8.15% YoY to $3.9B, led by strong acquisitions expanding the investment portfolio. The cash and cash equivalents dropped to $10M, and net tangible assets per share increased by 1.7% YoY to $1.77. Gearing increased to 33.7%, an increase of 440 bps YoY, which is in the lines of management's target range of 25%-40%, leaving extra room for more debt to take advantage of financial leverage. The portfolio’s Weighted Average Capitalization Rate (WACR) is down by 3 bps YoY to 5.42%.

Outlook

Management highlighted that FY27 will be a key year, as SKG progresses towards a more simplified and scalable operating model. SKG has provided distribution guidance of 4.5 cents per security for FY27, targeting a full-year payout ratio of 80%-100% of FFO. Storage King has 16 active development projects that can add 110,000 square meters of net lettable area (NLA) over the short to medium term. Currently, SKG has an available debt capacity of $400M to support future development. In the short term, earning headwinds principally relate to interest costs as developments move to the stabilizing segment. The core business remains well positioned for the mid- to long term with growth levers to drive earnings growth. All guidance assumes no material deterioration in prevailing operating conditions and is subject to execution risk.

(Source: Company Announcements)