National Storage fits the bill of 'industrial yield'

NSR is Australia’s leading owner and supplier of self-storage for both the consumer and small commercial markets. NSR is a REIT yielding around 6% for FY 16 with what we believe to be high single digit / low double digit EPS / DPS growth into the medium term. This growth comes from a combination of sources: 1) Slowly improving its average centre occupancy from current 70% to 80% plus over time; 2) Continuing to grow average rental rates above CPI as they have successfully done for the last five years; and 3) Making yield-accretive acquisitions utilising its circa $80m in debt capacity (acquisitions are typically done at initial yields of 8% plus vs funding costs of 4-5%). Self-storage may not be exciting but in undertaking the same broad strategy as NSR, Public Storage Inc – the largest listed self-storage operator in the USA –has outperformed the S&P 500 by 18% over 1 year, 25% over 5 years, and 270% over 10 years.