REG - Safestore Hldgs plc - Fourth quarter trading update
24/11/2022 07:00
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RNS Number : 4167H Safestore Holdings plc 24 November 2022
24 November 2022
Safestore Holdings plc
Fourth quarter trading update for the period 1 August 2022 to 31 October 2022
Solid performance and significant strategic progress complete an excellent
year
Group Operating Performance Q4 2022 Q4 2021(2) Change Change- CER(1)
Revenue (£'m) 56.8 51.1 11.2% 10.8%
Revenue (£'m)- year-to-date (YTD) 212.5 186.8 13.8% 14.3%
Closing Occupancy (let sq ft- million)(3) 6.317 5.883 7.4% n/a
Closing Occupancy (% of MLA) 82.1% 84.5% -2.4ppts n/a
Maximum Lettable Area (MLA -million)(4) 7.700 6.960 10.6% n/a
Average Storage Rate (£) 29.64 28.42 4.3% 3.9%
Average Storage Rate (£)- YTD 29.25 26.95 8.5% 9.2%
Group Operating Performance- like-for-like(3) Q4 2022 Q4 2021(2) Change Change- CER(1)
Revenue (£'m) 53.5 50.7 5.5% 5.1%
Revenue (£'m)- year-to-date (YTD) 204.3 185.5 10.1% 10.7%
Closing Occupancy (let sq ft- million)(4) 5.725 5.838 -1.9% n/a
Closing Occupancy (% of MLA)(5) 83.1% 85.2% -2.1ppts n/a
Average Occupancy (let sq ft- million) 5.786 5.884 -1.7% n/a
Average Occupancy (let sq ft- million)- YTD 5.723 5.685 0.7% n/a
Average Storage Rate (£) 30.84 28.52 8.1% 7.8%
Average Storage Rate (£)- YTD 29.99 27.03 11.0% 11.5%
Highlights
· Group revenue for the quarter in CER(1) up 10.8% and 11.2% at
actual exchange rates
· Like-for-like(5) Group revenue for the quarter in CER(1) up 5.1%
o UK up 5.8%
o Paris up 2.5%
o Spain up 6.8%
· Like-for-like(5) average rate for the quarter up 7.8% in CER(1)
o UK up 9.2%
o Paris up 3.3%
o Spain up 1.9%
· Like-for-like(5) occupancy at 83.1% (2021: 85.2%)
o UK down 2.6ppts at 83.0% (2021: 85.6%)
o Paris down 0.2ppts at 83.4% (2021 83.6%)
o Spain down 0.1ppts at 85.9% (2021: 86.0%)
· Revolving Credit Facilities (RCF's) refinanced with a new increased
£400m unsecured multi-currency four-year facility (with two one-year
extension options). Margins remain at 1.25% in line with previous RCF's and
all facilities, including private placement notes, are now unsecured.
· Eight new sites secured since our last update including three in
London, two in Paris, one in Madrid and two in the Netherlands.
· Group Property Pipeline of 1.4m sq ft representing c. 18% of the
existing portfolio.
· Lease extensions agreed at Sunderland and London- Crayford.
Frederic Vecchioli, Chief Executive Officer, commented:
"I am pleased to report the final quarter of an excellent year in which we
delivered significant strategic progress having enhanced our funding capacity
and secured eight new development sites. The strong performance for the year
is especially pleasing as it follows a record year in 2021. The result was
driven by strong revenue growth in the UK market, good performances in our
Parisian and Spanish businesses, and seven months' contribution from our
Benelux business, which was acquired in March 2022.
Early trading in the new financial year shows solid enquiry and new let growth
compared to last year with rates paid by new customers continuing to grow.
Over the last six years, the group has developed or acquired 66 stores and
expanded into three new countries (Netherlands, Belgium and Spain). In
addition, our development pipeline of 29 new stores represents a further c.
18% of our existing portfolio's MLA.
Our strong and flexible balance sheet has been significantly enhanced by the
agreement of a new unsecured four year £400m multi-currency revolving credit
facility which increases funding capacity, allowing us to continue to consider
strategic, value-accretive investments as and when they arise.
We have delivered a strong occupancy performance over recent years and, after
a significant level of acquisition and development activity over the last six
years, we still have 1.4m square feet of fully invested currently unlet space
in our UK, Paris, Spain and Benelux markets in addition to 1.4m of pipeline
space. Our most significant upside opportunity is from filling our existing
unlet space and that remains our priority. The business has demonstrated its
inherent resilience in recent times and, despite the challenging macroeconomic
environment, we are confident in the future of the business. As guided at our
third quarter results announcement, the Board anticipates that the business
will deliver Adjusted Diluted EPRA Earnings per Share(7) for 2021/22 of at
least 47p".
Business Highlights
UK Trading Performance
UK Operating Performance Q4 2022 Q4 2021(2) Change
Revenue (£'m) 42.8 40.0 7.0%
Revenue (£'m)- year-to-date (YTD) 163.0 144.1 13.1%
Closing Occupancy (let sq ft- million)(3) 4.637 4.690 -1.1%
Closing Occupancy (% of MLA) 82.6% 85.4% -2.8ppts
Maximum Lettable Area (MLA- million)(4) 5.620 5.490 2.4%
Average Storage Rate (£) 29.58 27.12 9.1%
Average Storage Rate (£)- YTD 28.79 25.32 13.7%
UK Operating Performance- like-for-like(3) Q4 2022 Q4 2021(2) Change
Revenue (£'m) 41.9 39.6 5.8%
Revenue (£'m)- year-to-date (YTD) 160.2 142.8 12.2%
Closing Occupancy (let sq ft- million)(4) 4.538 4.648 -2.4%
Closing Occupancy (% of MLA)(5) 83.0% 85.6% -2.6ppts
Average Occupancy (let sq ft- million) 4.587 4.681 -2.0%
Average Occupancy (let sq ft- million)- YTD 4.537 4.512 0.6%
Average Storage Rate (£) 29.74 27.23 9.2%
Average Storage Rate (£)- YTD 28.94 25.40 13.9%
The UK performed well in the final quarter with total revenue up 7.0% and
like-for-like revenue up 5.8%. For the full year, like-for-like revenue was up
12.2% compared to 2021. This performance built on a record fourth quarter in
2021 when like-for-like revenue was up 23.4%.
As ever, the Group looks to find an appropriate balance of rate growth and
occupancy performance in order to maximise revenue.
The UK result was driven by an excellent like-for-like average rate which
remained strong and was up 9.2% on the fourth quarter of 2021. The
like-for-like average rate also grew sequentially by 3.8% compared to the
third quarter of 2022.
In line with normal seasonal trading patterns, occupancy reduced in the final
quarter. Like-for-like closing occupancy closed the year at 83.0% (2021:
85.6%).
Average occupancy grew by 0.6% over the course of the year.
Total revenue for the year-to-date grew by 13.1% reflecting our strong
like-for-like performance, the 2021 store opening in Birmingham Middleway
offset by the closure of Birmingham Digbeth, the December 2021 acquisition of
Christchurch, and the December 2021 opening of our London Bow store. All
acquisitions, new store developments and extensions are performing in line
with or ahead of their business cases.
Paris Trading Performance
Paris Operating Performance Q4 2022 Q4 2021(2) Change
Revenue (€'m) 12.63 12.19 3.6%
Revenue (€'m)- year-to-date (YTD) 48.76 45.96 6.1%
Closing Occupancy (let sq ft- million)(3) 1.112 1.100 1.1%
Closing Occupancy (% of MLA) 81.7% 80.7% +1.0ppts
Maximum Lettable Area (MLA- million)(4) 1.360 1.360 -
Average Storage Rate (€) 40.93 39.76 2.9%
Average Storage Rate (€)- YTD 40.47 38.90 4.0%
Revenue (£'m) 10.9 10.4 4.8%
Revenue (£'m)- year-to-date (YTD) 41.4 39.9 3.8%
Paris Operating Performance- like-for-like(3) Q4 2022 Q4 2021(2) Change
Revenue (€'m) 12.47 12.17 2.5%
Revenue (€'m)- year-to-date (YTD) 48.37 45.94 5.3%
Closing Occupancy (let sq ft- million)(4) 1.094 1.097 -0.3%
Closing Occupancy (% of MLA)(5) 83.4% 83.6% -0.2ppts
Average Occupancy (let sq ft- million) 1.104 1.109 -0.5%
Average Occupancy (let sq ft- million)- YTD 1.092 1.077 1.4%
Average Storage Rate (€) 41.07 39.76 3.3%
Average Storage Rate (€)- YTD 40.56 38.90 4.3%
Revenue (£'m) 10.8 10.4 3.8%
Revenue (£'m)- year-to-date (YTD) 41.1 39.9 3.0%
Our Paris business had a solid quarter growing total revenue by 3.6%
year-on-year.
Like-for-like occupancy performance was robust for the quarter with closing
occupancy at 83.4%, down 0.2ppts compared to Q4 2021. The like-for-like
average rate was up by 3.3% and drove like-for-like revenue growth of 2.5%.
Our like-for-like average storage rate also grew sequentially by 1.9% compared
to the third quarter of our 2022 financial year.
Total revenue for the year-to-date grew by 6.1% reflecting the good
like-for-like performance (up 5.3% compared to 2021) and the 2021 opening of
our Magenta store.
Sterling equivalent like-for-like revenue was impacted by the 1.3% weakening
in the Sterling: Euro exchange rate for the quarter compared to Q4 2021. As a
result, sterling equivalent total and like-for-like revenue grew by 4.8% and
3.8% respectively compared to Q4 2021.
Spain Trading Performance(6)
Spain Operating Performance Q4 2022 Q4 2021(2) Change
Revenue (€'m) 0.96 0.88 9.1%
Revenue (€'m)- year-to-date (YTD) 3.59 3.29 9.1%
Closing Occupancy (let sq ft- million)(3) 0.095 0.093 2.2%
Closing Occupancy (% of MLA) 78.9% 86.0% -7.1ppts
Maximum Lettable Area (MLA- million)(4) 0.120 0.110 9.1%
Average Storage Rate (€) 34.88 34.36 1.5%
Average Storage Rate (€)- YTD 34.07 32.25 5.6%
Revenue (£'m) 0.8 0.7 14.3%
Revenue (£'m)- year-to-date (YTD) 3.0 2.8 7.1%
Spain Operating Performance- like-for-like(3) Q4 2022 Q4 2021(2) Change
Revenue (€'m) 0.94 0.88 6.8%
Revenue (€'m)- year-to-date (YTD) 3.57 3.29 8.5%
Closing Occupancy (let sq ft- million)(4) 0.093 0.093 -
Closing Occupancy (% of MLA)(5) 85.9% 86.0% -0.1%ppt
Average Occupancy (let sq ft- million) 0.095 0.094 1.1%
Average Occupancy (let sq ft- million)- YTD 0.094 0.096 -2.1%
Average Storage Rate (€) 35.02 34.36 1.9%
Average Storage Rate (€)- YTD 34.11 32.25 5.8%
Revenue (£'m) 0.8 0.7 14.3%
Revenue (£'m)- year-to-date (YTD) 3.0 2.8 7.1%
Our Spanish business saw a strong 6.8% growth in like-for-like revenue in the
quarter and 8.5% growth for the full year. Closing occupancy ended the year at
85.9%, in line with 2021 (86.0%).
The average storage rate grew by 1.9% to €35.02 compared to €34.36 for Q4
2021. This rate grew sequentially by 5.4% compared to the third quarter of
2022.
Ancillary revenue growth was strong and, as a result, total revenue grew by
9.1% compared to Q4 2021.
Following the acquisition of four stores in Barcelona less than three years
ago, the business has already opened one new site and has added a pipeline of
eight 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 were acquired on 30 March 2022 and,
therefore, contributed seven month's revenue (€5.9m) in the period.
The Benelux businesses grew revenue by 5.3% compared to the third quarter of
2022 and the businesses ended the period with a combined closing occupancy of
78.8%.
The business was originally established in 2019 with the acquisition of six
stores and it has been subsequently developed into a 15-store portfolio with a
pipeline of four additional stores.
Refinancing
Since the end of the financial year, the Group has 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.
The Group will pay interest at a margin of 1.25% plus SONIA or Euribor
depending on whether the borrowings are drawn in Sterling or Euros. The margin
is at the same level as the previous facility agreements.
A commitment fee of 35% of the margin is payable on undrawn amounts under the
facility. This has reduced from 40% under the previous facility agreements.
Reflecting the Group's improved credit profile, the banking group and existing
US Private Placement Noteholders have agreed that all of the Group's
previously secured borrowings move to an unsecured basis, thus reducing
administrative and legal costs associated with the facilities.
The main covenants under all of the Group's borrowings are a Group Loan to
Value (LTV) covenant of 60% (replacing separate UK and French LTV covenants)
and an Interest Cover Ratio covenant of 2.4x.
The hedging arrangements under the previous facility agreements have been
continued under the new agreements. Therefore, the Group benefits from £55m
of Interest Rate Swaps until 30 June 2023 at a rate of 0.6885%.
Environmental Social and Governance (ESG) KPI's are in the process of being
agreed with the Group's lenders. Once finalised, the margin under the facility
will be linked to performance against the ESG targets.
Property Pipeline Developments
Openings in the period
Winchester Extension
An 11,000 sq ft extension to our existing Winchester store opened in the
quarter. The existing store has an MLA of 42,000 sq ft and has peaked at more
than 90% occupancy.
New Development Sites
UK
Three new sites have been secured since our third quarter announcement.
In Romford in London, we have secured a freehold site with an existing
warehouse which will be converted, subject to planning permission, to a 41,000
sq ft store.
In Crayford, we have secured a leasehold site on which we will convert an
existing warehouse to a 9,400 sq ft extension to our existing Crayford site.
In Walton-on-Thames in London, we have secured a freehold site with an
existing warehouse which will be converted, subject to planning permission, to
a 20,700 sq ft store.
Our total UK development pipeline now amounts to c. 511,800 sq ft of which c.
415,100 sq ft is in London.
Paris
In Paris we have secured two new sites during the last quarter.
Paris East 1 and Paris North West 1 are freehold sites on which we will
convert existing buildings, subject to planning, to 60,000 sq ft and 54,000 sq
ft stores respectively.
Our Paris West 2 site did not receive planning permission and has been removed
from the pipeline.
Our Paris pipeline now amounts to c. 349,200 sq ft.
Spain
A new freehold site has been secured in Southern Madrid (Southern Madrid 2) on
which we will convert an existing building, subject to planning permission,
into a 68,800 sq ft storage facility.
Our Spanish pipeline now amounts to c. 347,300 sq ft including 250,600 sq ft
across five stores in Madrid and 96,700 sq ft over three stores in Barcelona.
Netherlands
In the Netherlands we have secured two new sites in the last quarter.
New freehold sites have been secured in Amsterdam and Aalsmeer where we will
build new stores, subject to planning, of 61,400 sq ft and 48,400 sq ft
respectively.
In the Netherlands, our pipeline now consists of 212,300 sq ft of space in
four stores.
Planning Permissions
Since our third quarter announcement, planning permissions have been granted
for our sites in Eastern Madrid, Northern Barcelona and South Barcelona.
Pipeline Summary
Our pipeline of c. 1.4m sq ft represents c. 18% of our existing property
portfolio.
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, PG, UC 52,000 New build
Wigan FH C, UC 42,700 Conversion
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
Northern Madrid FH C, PG 53,000 Conversion
Southern Madrid FH C, PG 32,000 Conversion
Eastern Madrid FH C, PG 50,000 Conversion
Northern Barcelona FH C, PG 42,000 Conversion
South Barcelona FH C, PG 30,000 Conversion
Amersfoort- Netherlands FH CE, STP 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
Opening Beyond 2024
New Developments
London- Old Kent Road FH C, STP 76,500 New build
London- Woodford FH CE, PG 76,000 New build
London- Bermondsey FH C, STP 50,000 New build
London- Walton FH C, STP 20,700 Conversion
Paris- La Défense FH C, PG 44,000 Mixed use facility
Total Pipeline MLA (let sq ft- million) c. 1.421
Total Outstanding CAPEX (£'m) c. 138.0
*C = completed, CE = contracts exchanged, STP = subject to planning, PG =
planning granted, UC = under construction
Lease Extensions and Assignments
During the period we have completed the extensions of two of our existing
leases.
In Crayford, we have extended the lease on our existing store to 2042, with a
tenant-only break option in 2032. A rent-free period of four months was agreed
as part of this agreement. The lease on the new satellite store reported above
also terminates in 2042.
In Sunderland, we have extended the lease on our store to 2047 with a tenant
break option in 2037. A six-month rent-free period was agreed as part of this
lease extension.
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 - Q4 2021 is the quarter ended 31 October 2021.
3 - Occupancy excludes offices but includes bulk tenancy. As of 31 October
2022, closing occupancy includes 24,000 sq ft of bulk tenancy (31 October
2021: 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 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.
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 179
stores on 31 October 2022, 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, 5 stores in Spain, 9 stores in the Netherlands and 6
stores in Belgium.
· 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 October 2022, Safestore had a maximum lettable area
("MLA") of 7.698 million sq ft (excluding the expansion pipeline stores) of
which 6.317 million sq ft was occupied.
· Safestore employs around 750 people in
the UK, Paris, Spain, the Netherlands and Belgium.
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