REG - Safestore Hldgs plc - First quarter trading update

Safestore HoldingsAnnouncement

21/02/2023 07:00

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RNS Number : 5546Q  Safestore Holdings plc  21 February 2023

21 February 2023

 

Safestore Holdings plc

("Safestore", "the Company" or "the Group")

First quarter trading update for the period 1 November 2022 to 31 January 2023

 

Solid start to the 2023 financial year

 

 Group Operating Performance                Q1 2023  Q1 2022(2)  Change    Change- CER(1)
 Revenue (£'m)                              55.7     50.9        9.4%      8.4%
 Closing Occupancy (let sq ft- million)(3)  6.095    5.708       6.8%      n/a
 Closing Occupancy (% of MLA)               77.6%    80.8%       -3.2ppts  n/a
 Maximum Lettable Area (MLA -million)(4)    7.850    7.070       11.0%     n/a
 Average Storage Rate (£)                   30.42    29.55       2.9%      2.0%

 

 Group Operating Performance- like-for-like(3)  Q1 2023  Q1 2022(2)  Change    Change- CER(1)
 Revenue (£'m)                                  52.6     50.5        4.2%      3.4%
 Closing Occupancy (let sq ft- million)(4)      5.545    5.687       -2.5%     n/a
 Closing Occupancy (% of MLA)(5)                79.1%    81.5%       -2.4ppts  n/a
 Average Occupancy (let sq ft- million)         5.574    5.710       -2.4%     n/a
 Average Storage Rate (£)                       31.60    29.58       6.8%      6.0%

 

Highlights

·      Group revenue for the quarter in CER(1) up 8.4% and 9.4% at
actual exchange rates

·      Like-for-like(5) Group revenue for the quarter in CER(1) up 3.4%

o  UK up 3.5%

o  Paris up 2.6%

o  Spain up 7.1%

·      Like-for-like(5) average rate for the quarter up 6.0% in CER(1)

o  UK up 7.2%

o  Paris up 1.0%

o  Spain up 8.5%

·      Like-for-like(5) occupancy at 79.1% (2022: 81.5%)

o  UK down 3.3ppts at 78.7% (2022: 82.0%)

o  Paris up 1.5ppts at 80.7% (2022 79.2%)

o  Spain down 4.9ppts at 80.8% (2022: 85.7%)

·      As previously reported, Revolving Credit Facilities (RCF's)
refinanced with a new increased £400m unsecured multi-currency four-year
facility (with two one-year extension options) in November 2022. Margins
remain at 1.25% in line with previous RCF's and all facilities, including
private placement notes, are now unsecured.

·      Group Property Pipeline of 1.5m sq ft representing c. 19% of the
existing portfolio.

·      Two new sites secured in Ellesmere Port in the UK and in Central
Barcelona adding 69,700 sq ft of MLA.

·      Edinburgh leasehold re-geared and freehold of Valencia store
acquired in Barcelona.

·      Acquisition of 58,000 sq ft existing storage facility in
Apeldoorn in the Netherlands.

·      Entry into German market via a new Joint Venture ("JV") with
Carlyle which has acquired the seven-store myStorage business with 326,000 sq
ft of MLA(4).

 

Frederic Vecchioli, Chief Executive Officer, commented:

 

"I am pleased to report that the solid early trading indicated in our January
2023 announcement has continued through to the end of our first quarter with
the Group delivering like-for-like revenue growth of 4.2% and total revenue
growth of 9.4% (3.4% and 8.4% respectively on a CER basis).

 

We have opened two new stores in the period in Spain, acquired an existing
operation in the Netherlands and added two stores in the UK and Spain to our
pipeline which, at 1.5m sq ft, now represents 19% of our existing portfolio's
MLA. We anticipate the pipeline will continue to grow over the coming months.
Our strong and flexible, recently refinanced balance sheet has significant
funding capacity, allowing us to continue to consider and execute strategic,
value-accretive investments as and when they arise.

 

Alongside our attractive development pipeline, we continue to prioritise the
significant upside from filling our 1.8m square feet of fully invested,
currently unlet space. The business has demonstrated its inherent resilience
in recent times and we look to the future with confidence. The first quarter's
trading performance has provided us with a solid base for the rest of the
financial year and we anticipate that the business delivers Adjusted Diluted
EPRA Earnings per Share(7) for 2022/23 in line with the consensus of analysts'
forecasts(8)".

 

Business Highlights

 

UK Trading Performance

 UK Operating Performance                   Q1 2023  Q1 2022(2)  Change
 Revenue (£'m)                              41.6     39.9        4.3%
 Closing Occupancy (let sq ft- million)(3)  4.410    4.536       -2.8%
 Closing Occupancy (% of MLA)               78.4%    81.1%       -2.7ppts
 Maximum Lettable Area (MLA- million)(4)    5.620    5.600       0.4%
 Average Storage Rate (£)                   30.45    28.41       7.2%

 

 UK Operating Performance- like-for-like(3)  Q1 2023  Q1 2022(2)  Change
 Revenue (£'m)                               40.9     39.5        3.5%
 Closing Occupancy (let sq ft- million)(4)   4.358    4.515       -3.5%
 Closing Occupancy (% of MLA)(5)             78.7%    82.0%       -3.3ppts
 Average Occupancy (let sq ft- million)      4.384    4.538       -3.4%
 Average Storage Rate (£)                    30.48    28.43       7.2%

 

The UK performed solidly in the first quarter with total revenue up 4.3% and
like-for-like revenue up 3.5%, driven by a continued strong average storage
rate increase of 7.2%, offset by a reduction in average occupancy of 3.4%,
where we have seen a return to a more normal cycle of trading in the current
financial year. In the first quarter, as anticipated, we have seen an
occupancy outflow as is typical for the period (which is our low season). The
average storage rate grew sequentially by 2.9% compared to the fourth quarter
of 2022.

 

As ever, the Group looks to find an appropriate balance of rate growth and
occupancy performance in order to maximise revenue.

 

Enquiry levels for the first quarter, whilst slightly behind the same period
in 2022, remained significantly ahead of the pre-pandemic period.

 

Paris Trading Performance

 

 Paris Operating Performance- Total and like-for-like(3)  Q1 2023  Q1 2022(2)  Change
 Revenue (€'m)                                            12.47    12.15       2.6%
 Closing Occupancy (let sq ft- million)(3)                1.099    1.079       1.9%
 Closing Occupancy (% of MLA)                             80.7%    79.2%       +1.5ppts
 Average Occupancy (let sq ft- million)                   1.102    1.080       2.0%
 Maximum Lettable Area (MLA- million)(4)                  1.360    1.360       -
 Average Storage Rate (€)                                 41.26    40.84       1.0%
 Revenue (£'m)                                            10.9     10.3        5.8%

 

Our Paris business had a solid quarter growing total revenue by 2.6%
year-on-year.

 

Like-for-like occupancy performance was robust for the quarter with closing
occupancy at 80.7%, up 1.5ppts compared to Q1 2022. As we return to a more
normal cycle of trading in the current financial year, we have seen a modest
occupancy outflow in the period as expected and which is typical for the first
quarter (our low season).

 

The like-for-like average rate was up by 1.0%, and together with the increase
in like-for-like occupancy, drove the like-for-like revenue growth of 2.6%.

 

The average storage rate grew sequentially by 0.8% compared to the fourth
quarter of 2022.

 

Sterling equivalent like-for-like revenue was impacted by the 3.3% weakening
in the Sterling: Euro exchange rate for the quarter compared to Q1 2022. As a
result, sterling equivalent total and like-for-like revenue grew by 5.8%
compared to Q1 2022.

 

Enquiry levels for the first quarter were slightly ahead of the same period in
2022 and significantly ahead of the pre-pandemic period.

 

Spain Trading Performance(6)

 Spain Operating Performance                Q1 2023  Q1 2022(2)  Change
 Revenue (€'m)                              0.95     0.85        11.8%
 Closing Occupancy (let sq ft- million)(3)  0.096    0.093       3.2%
 Closing Occupancy (% of MLA)               46.4%    85.7%       -39.3ppts
 Maximum Lettable Area (MLA- million)(4)    0.210    0.110       90.9%
 Average Storage Rate (€)                   35.48    33.47       6.0%
 Revenue (£'m)                              0.8      0.7         14.3%

 

 Spain Operating Performance- like-for-like(3)  Q1 2023  Q1 2022(2)  Change
 Revenue (€'m)                                  0.91     0.85        7.1%
 Closing Occupancy (let sq ft- million)(4)      0.088    0.093       -5.4%
 Closing Occupancy (% of MLA)(5)                80.8%    85.7%       -4.9%ppt
 Average Occupancy (let sq ft- million)         0.088    0.092       -4.3%
 Average Storage Rate (€)                       36.30    33.47       8.5%
 Revenue (£'m)                                  0.8      0.7         14.3%

 

In the quarter, our Spanish business saw a strong 11.8% and 7.1% growth in
total and like-for-like revenue respectively.

 

The like-for-like average storage rate grew by 8.5% to €36.30 compared to
€33.47 for Q1 2022. This rate grew sequentially by 3.7% compared to the
fourth quarter of 2022. This increase in the like-for-like average rate,
offset by a reduction in like-for-like average occupancy of 4.3%, drove the
like-for-like revenue growth of 7.1%.

 

The reduction in total occupancy to 46.4% reflects the dilutive effect of the
three recent store openings.

 

Sterling equivalent like-for-like revenue was impacted by the 3.3% weakening
in the Sterling: Euro exchange rate for the quarter compared to Q1 2022. As a
result, sterling equivalent total and like-for-like revenue grew by 14.3%
compared to Q1 2022.

 

Following the acquisition of four stores in Barcelona just over three years
ago, the business has already opened three new sites and has added a pipeline
of seven stores across Barcelona and Madrid and we look with confidence to the
continued expansion of the portfolio.

 

Benelux Trading Performance

 

Our Netherlands and Belgium businesses, acquired on 30 March 2022, contributed
€2.7m revenue in the period.

 

The Benelux businesses grew revenue by 2.2% (excluding the newly acquired
Apeldoorn site as set out below) compared to the fourth quarter of 2022 and
the businesses ended the period with a combined closing occupancy of 74.2%.

 

The business was originally established in 2019 with the acquisition of six
stores and was subsequently developed into a 16-store portfolio with a
pipeline of five additional stores.

 

Refinancing

 

In November 2022, the Group completed the refinancing of its revolving credit
facilities (RCFs) which were due to expire in June 2023.

 

The previous £250m sterling and €70m euro secured RCFs have been replaced
with a single multi-currency unsecured £400m facility. In addition, a further
£100m uncommitted accordion facility is incorporated into the facility
agreement.

 

The facility is for a four-year term with two one-year extension options
exercisable after the first and second years of the agreement.

 

Further detail is included in our Results Announcement of 17 January 2023.

 

Property Pipeline Developments

 

Openings in the period

 

Northern and Southern Madrid

 

In March 2021 and April 2021, the Group exchanged contracts on two freehold
buildings in Southern Madrid and Northern Madrid, respectively. Both existing
buildings have been converted into 32,000 and 53,000 sq ft MLA self storage
facilities and were opened in November 2022.

 

New Development Sites

 

Ellesmere Port- UK

 

In Ellesmere Port in Northwest England we have secured a new freehold
development site, located in an accessible position near junction 8 of the M53
on the affluent Wirral Peninsular. A 55,000 sq ft MLA new build store should
open in late 2023.

 

Spain

 

A new leasehold site in Central Barcelona (Central Barcelona 3) has been
acquired. The existing building will be converted into a 14,700 sq ft MLA
store and is expected to open in 2023. The building has planning permission
and the lease is 30 years in length.

 

Pipeline Summary

 

We are leveraging our effective and scalable operating platform to increase
our expansion plans across both the UK and continental Europe. This approach
has resulted in the largest development pipeline in our history. This pipeline
of c. 1.5m sq ft represents c. 19% of our existing property portfolio.

 

In the first quarter of the 2023 financial year, c. £25m has been spent on
the new store openings, the Valencia freehold acquisition, the acquisition of
the Apeldoorn site in the Netherlands and the pipeline stores.

 

 Opening 2023                  FH/LH           Status*         MLA     Other
 Redevelopments and Extensions
 London- Crayford              LH              C, UC           9,400   Extension
 Paris- Pyrenees               LH              C, UC           22,200  Extension
 New Developments
 London- Morden                FH              C, UC           52,000  New build
 Wigan                         FH              C, UC           42,700  Conversion
 Ellesmere Port                FH              C, UC           55,000  New build
 Paris- South Paris            FH              C, PG           55,000  New build
 Paris- West 1                 FH              CE, STP         56,000  New build
 Paris- West 3                 FH              CE, STP         58,000  New Build
 Paris- East 1                 FH              CE, STP         60,000  Conversion
 Paris- North West 1           FH              CE, STP         54,000  Conversion
 Eastern Madrid                FH              C, PG           50,000  Conversion
 Northern Barcelona            FH              C, PG           42,000  Conversion
 South Barcelona               FH              C, PG           30,600  Conversion
 Central Barcelona 3           LH              C, UC           14,700  Conversion
 Amersfoort- Netherlands       FH              C, UC           58,000  New build
 Almere- Netherlands           FH              C, STP          44,500  Conversion
 Opening 2024
 Redevelopments and Extensions
 New Developments
 London- Paddington Park West  FH              C, PG           13,000  Conversion, Satellite
 London- Lea Bridge            FH              C, PG           76,500  New build
 London- Romford               FH              C, STP          41,000  New build
 Shoreham                      FH              CE, STP         54,000  New build
 South West Madrid             FH              CE, STP         46,800  Conversion
 Southern Madrid 2             FH              CE, STP         68,800  Conversion
 Central Barcelona 2           LH              CE, STP         24,700  Conversion
 Amsterdam- Netherlands        FH              CE, STP         61,400  New build
 Aalsmeer- Netherlands         FH              CE, STP         48,400  New build
 Rotterdam- Netherlands        FH              C, UC           71,000  New build
 Opening 2025
 New Developments
 London- Woodford              FH              C, PG           76,000  New build
 London- Walton                FH              C, STP          20,700  Conversion
 Paris- La Défense             FH              C, PG           44,000  Mixed use facility
 Opening Beyond 2025
 New Developments
 London- Old Kent Road         FH              C, STP          76,500  New build
 London- Bermondsey            FH              C, STP          50,000  New build
 Total Pipeline MLA (let sq ft- million)                       c. 1.477
 Total Outstanding CAPEX (£'m)                                 c. 141.0
 *C = completed, CE = contracts exchanged, STP = subject to planning, PG =
 planning granted, UC = under construction

 

Lease Extension

 

During the period we have completed the extension of our lease at Edinburgh
Fort Kinnaird store. The lease has been extended by a further 10 years to
2040.

 

Freehold Purchase

 

In Barcelona, the Group has been leasing its Valencia store since 2013. During
the period, the freehold of the site was acquired for €3.6m.

 

Acquisition of Apeldoorn Self-Storage Facility in the Netherlands

 

During the period, the Group completed the acquisition of an existing 58,000
sq ft self storage facility in Apeldoorn in the Netherlands. The store was
operating under the Stoor brand and is situated in an easily accessible
commercial and logistics district on the north side of the city, which has a
population of 165,000.

 

New Joint Venture with Carlyle and Investment in myStorage in Germany

 

As announced in December 2022, Safestore has entered the German self storage
market via a new Joint Venture with Carlyle, which has acquired the myStorage
business.

 

Safestore has developed a multi-country highly scalable platform with leading
marketing and operational expertise in self storage, with a proven track
record for developing its platform in new markets.

 

The acquisition of myStorage represented an excellent opportunity to develop
our platform into the attractive German self storage market. The Joint Venture
builds upon our previous successful relationship with Carlyle having entered
the Benelux market in 2019. Our common intention is to target development and
acquisition opportunities through the Joint Venture, providing the opportunity
to achieve operational scale and to develop local market knowledge, whilst
also retaining the option for Safestore to develop its own wholly owned self
storage sites in Germany. We look forward to continuing our working
relationship with Carlyle, and to developing a long and mutually beneficial
relationship.

 

The German market is one of Europe's more under-penetrated markets with just
0.09 sq ft of storage space per capita which compares to 0.76 sq ft in the UK,
0.24 sq ft in France, 0.24 sq ft in Spain, 0.60 sq ft in the Netherlands and
0.20 sq ft in Belgium. According to the 2022 FEDESSA report, there are just
320 facilities in Germany and 7.6m sq ft of lettable space.

 

myStorage has seven medium to long-term leasehold stores and 326,000 sq ft of
MLA in Berlin, Heidelburg, Mannheim, Fürth, Nuremburg, Neu-Ulm, and
Reutlingen.

 

On acquisition, the occupancy of the portfolio was 67% with two of the stores
having opened in 2021.

 

Safestore's initial investment in the Joint Venture was a c. €2.2 million
equity investment for a 10% share of the Joint Venture. Safestore will also
earn a fee for providing management services to the Joint Venture. The Group
expects to earn an initial return on investment of c. 15% for the first full
year before transaction-related costs reflecting its share of expected joint
venture profits and fees for management services.

 

Ends

 

1 - CER is Constant Exchange Rates (Euro denominated results for the current
period have been retranslated at the exchange rate effective for the
comparative period, in order to present the reported results on a more
comparable basis).

2 - Q1 2022 is the quarter ended 31 January 2022.

3 - Occupancy excludes offices but includes bulk tenancy. As of 31 January
2023, closing occupancy includes 24,000 sq ft of bulk tenancy (31 January
2022: 14,000 sq ft).

4 - MLA is Maximum Lettable Area.

5 - Like-for-like information includes only those stores which have been open
throughout both the current and prior financial years, with adjustments made
to remove the impact of new and closed stores, as well as corporate
transactions.

6 - The Spain business was acquired on 30 December 2019 with the four
originally acquired stores now considered like-for-like.

7- Adjusted Diluted EPRA EPS is based on the European Public Real Estate
Association's definition of Earnings and is defined as profit or loss for the
period after tax but excluding corporate transaction costs, change in fair
value of derivatives, gain/loss on investment properties and the associated
tax impacts. The Company then makes further adjustments for the impact of
exceptional items, IFRS 2 share-based payment charges, exceptional tax items
and deferred tax charges. This adjusted earnings is divided by the diluted
number of shares. The IFRS 2 cost is excluded as it is written back to
distributable reserves and is a non-cash item (with the exception of the
associated National Insurance element). Therefore, neither the Company's
ability to distribute nor pay dividends are impacted (with the exception of
the associated National Insurance element). The financial statements will
disclose earnings on a statutory, EPRA and Adjusted Diluted EPRA basis and
will provide a full reconciliation of the differences in the financial year in
which any LTIP awards may vest.

8 - The analyst consensus for Adjusted Diluted EPRA EPS for the current
financial year, based on the forecasts of thirteen analysts, is 49.5p. The
thirteen analyst forecasts range from 45.3p to 54.0p

 

This announcement contains inside information.

 

Enquiries

 

 Safestore Holdings PLC
 Frederic Vecchioli, Chief Executive Officer   via Instinctif Partners
 Andy Jones, Chief Financial Officer
 www.safestore.com (http://www.safestore.com)

 Instinctif Partners
 Guy Scarborough/ Bryn Woodward                07917 178920 / 07739 342009

 

 

Notes to Editors

 

·      Safestore is the UK's largest self-storage group with 182
stores on 31 January 2023, comprising 130 wholly owned stores in
the UK (including 72 in London and the South East with the remainder in
key metropolitan areas such as Manchester, Birmingham, Glasgow, Edinburgh,
Liverpool, Sheffield, Leeds, Newcastle, and Bristol), 29 wholly owned stores
in the Paris region, 7 stores in Spain, 10 stores in the Netherlands and 6
stores in Belgium. In addition, the Group operates 7 stores in Germany under a
Joint Venture agreement with Carlyle.

 

·      Safestore operates more self-storage sites inside the M25 and in
central Paris than any competitor providing more proximity to customers in
the wealthiest and more densely populated UK and French markets.

 

·      Safestore was founded in the UK in 1998. It acquired the French
business "Une Pièce en Plus" ("UPP") in 2004 which was founded in 1998 by the
current Safestore Group CEO Frederic Vecchioli.

 

·      Safestore has been listed on the London Stock Exchange since
2007. It entered the FTSE 250 index in October 2015.

 

·      The Group provides storage to around 90,000 personal and business
customers.

 

·      As of 31 January 2023, Safestore had a maximum lettable area
("MLA") of 7.852 million sq ft (excluding the expansion pipeline stores) of
which 6.095 million sq ft was occupied.

 

·      Safestore employs around 750 people in
the UK, Paris, Spain, the Netherlands, and Belgium.

 

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