REG - Lok'nStore Group - Sale and Manage-Back of Four Stores

Lok'n StoreAnnouncement

01/02/2022 07:00

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RNS Number : 2119A  Lok'nStore Group PLC  01 February 2022

1 February 2022

 

Lok'nStore Group plc ("Lok'nStore", the "Group" or the "Company")

Sale and Manage-Back of Four Stores

"Transaction raises £39m to be reinvested in growth"

Highlights:

·    Sale and Manage-Back of four freehold stores (the "Transaction") for
a total gross consideration of £39.0 million.  The Transaction represents a
22.8% uplift on the independent external valuation of the stores at 31 July
2021.

 

·    The Transaction is immediately accretive to Group net asset value,
demonstrating the increasing demand for good quality UK self-storage assets
with mature cash flows

 

·   The Transaction will provide net sales proceeds of c.£37.2 million for
reinvestment into new, faster  growing landmark stores

 

·    Lok'nStore has three sites with lawyers that are expected to be
secured shortly.  The new targets funded by the Transaction are over and
above Lok'nStore's current pipeline of twelve stores

The Transaction:

Lok'nStore, the fast-growing self-storage company, is pleased to announce the
Sale and Manage-Back of four of its freehold stores (the "Transaction") for a
total gross consideration of £39.0 million to Self-Storage Trading LLP.  The
purchaser is an existing institutional managed-store client wholly independent
of Lok'nStore and its directors.

Lok'nStore will continue to manage the stores, located in Basingstoke,
Cardiff, Horsham and Portsmouth, as branded Lok'nStore operations maintaining
the operational footprint of the business. Lok'nStore will receive management
and performance fees for managing them on behalf of their new owner.

The total consideration of £39 million receivable is subject to a £1.8
million downward adjustment in respect of certain committed works to be
completed at two of the sites.

The net proceeds of the sale will be recycled quickly into new, fast growing
landmark stores. As of today, Lok'nStore has three further sites with lawyers
that we expect to secure shortly, and a number of other opportunities are
progressing as part of the Group's continuous site evaluation program which
continues to identify high-quality sites for new landmark stores. These new
target sites are over and above Lok'nStore's current pipeline of twelve stores
which will be funded from the Group's existing £100 million revolving credit
facility.

In the year to 31 July 2021 the four stores generated revenue of £2.54
million and contributed £1.54 million to Group EBITDA.  In the first year
following the sale, the Group expects to receive incremental management fees
of c.£0.2 million in respect of the manage-back arrangement which will flow
directly to Group EBITDA.  The historic cost of the four stores was £13.75
million and their stated fair value as at 31 July 2021 was £31.75 million.

This Transaction does not impact the Group's ability to grow its annual
dividend in line with market expectations and which is well covered by
projected EBITDA levels of the business going forward.

The Group's adjusted pro forma Loan to Value ratio at 31 January 2022
calculated on a net debt basis falls to c. 8.0% (31 July 2021: 21.0%).

Independent Valuations of the Group's Stores:

Independent valuations of the Group's stores are commissioned annually at the
Group's July 31 year-end. Following this transaction and other recent
transactions in the self-storage market, the Board will consider whether at
the Group's half-year ended 31 January 2022, there should be an upward
adjustment made to the valuations of other stores in the Group and will report
on this when we announce our interim results on Monday 25(th) April 2022.

Trading Update:

Trading since the year end in July 2021 has continued well. The fully funded
existing new store pipeline of 12 stores is progressing well and in early
January 2022 the Group opened a new Landmark store in Warrington.  Lok'nStore
is onsite at four stores, two of which will open in the coming months.

Lok'nStore will announce a pre close trading update on Monday 7 February 2022
for the six-month period ending 31 January 2022.

Andrew Jacobs, Executive Chairman of Lok'nStore said:

"This transaction, at a 22.8% premium to the July 2021 independent valuation,
demonstrates the value Lok'nStore is creating and the growing institutional
demand for UK self-storage assets.

"The £37.2 million of net cash generated from this transaction will support
the further expansion of our new Landmark store pipeline. Our strategy remains
unchanged, to recycle capital to deliver a faster growing return, which allows
us to increase the rate of dividend growth for shareholders.

"This is a busy and exciting time for Lok'nStore as we rapidly grow and
improve the quality of our owned portfolio creating value for our shareholders
without significantly increasing risk."

 

 Enquiries:
 Lok'nStore                                       01252 521 010

 Andrew Jacobs, Executive Chairman

 Ray Davies, Finance Director
 finnCap Ltd                                      020 7220 0500

 Julian Blunt/Seamus Fricker, Corporate Finance

 Alice Lane, Corporate Broking
 Peel Hunt LLP                                    020 7418 8900

 Capel Irwin/Carl Gough/Henry Nicholls

 Camarco                                          020 3757 4991

 Billy Clegg/Tom Huddart/Emily Shea-Simonds

 

 

-Ends-

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