REG - Safestore Hldgs plc - Third Quarter Trading Update
07/09/2023 07:00
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RNS Number : 6268L Safestore Holdings plc 07 September 2023
7 September 2023
Safestore Holdings plc
Third quarter trading update for the period 1 May 2023 to 31 July 2023
Further strategic progress and continued revenue growth
Group Operating Performance Q3 2023 Q3 2022(2) Change Change- CER(1)
Revenue (£'m) 56.5 54.7 3.3% 2.9%
Revenue (£'m)- year-to-date (YTD) 166.6 155.7 7.0% 6.0%
Closing Occupancy (let sq ft- million)(3) 6.389 6.461 -1.1% n/a
Closing Occupancy (% of MLA) 79.1% 84.3% -5.2ppts n/a
Maximum Lettable Area (MLA)(4) 8.080 7.670 5.3% n/a
Average Storage Rate (£) 29.68 28.59 3.8% 3.5%
Average Storage Rate (£)- YTD 30.27 29.11 4.0% 3.1%
REVPAF(9) (£)- YTD 27.56 27.15 1.5% 0.7%
Group Operating Performance- like-for-like(3) Q3 2023 Q3 2022(2) Change Change- CER(1)
Revenue (£'m) 52.7 52.0 1.3% 1.2%
Revenue (£'m)- year-to-date (YTD) 156.2 151.4 3.2% 2.4%
Closing Occupancy (let sq ft- million)(4) 5.744 5.952 -3.5% n/a
Closing Occupancy (% of MLA)(5) 81.8% 85.3% -3.5%ppts n/a
Average Occupancy (let sq ft- million) 5.643 5.846 -3.5% n/a
Average Occupancy (let sq ft- million)- YTD 5.568 5.753 -3.2% n/a
Average Storage Rate (£) 31.04 29.62 4.8% 4.5%
Average Storage Rate (£)- YTD 31.57 29.60 6.7% 5.8%
REVPAF(9) (£)- YTD 29.76 29.01 2.6% 1.8%
Highlights
· Group revenue for the quarter in CER(1) up 2.9% and 3.3% at
actual exchange rates
· Like-for-like(5) Group revenue for the quarter in CER(1) up 1.2%
o UK up 0.7%
o Paris up 3.2%
o Spain down 2.2%
· Like-for-like(5) average rate for the quarter up 4.5% in CER(1)
o UK up 4.4%
o Paris up 4.3%
o Spain up 5.6%
· Like-for-like(5) closing occupancy at 81.8% (2022: 85.3%)
o UK down 4.0ppts at 81.8% (2022: 85.8%)
o Paris down 0.7ppts at 82.1% (2022 82.8%)
o Spain down 8.2ppts at 82.8% (2022: 91.0%)
· Two new store openings in the period in Eastern Madrid and South
Barcelona with a combined MLA of 81,000 sq ft.
· Three new sites secured in Watford and Eastleigh in the UK and in
Pamplona in Spain adding 132,000 sq ft of MLA to the pipeline.
· Two new extensions of existing sites added at London- Holloway
and Paris- Poissy adding 21,500 sq ft of MLA.
· Group Property Pipeline of 1.523m sq ft representing c. 19% of
the existing portfolio.
Frederic Vecchioli, Chief Executive Officer, commented:
"After very strong comparative quarters in the last two years (18.6%
like-for-like revenue growth in 2021 and 9.5% in 2022), I am pleased to report
that the group has delivered further like-for-like revenue growth as well as
what we believe to be industry leading REVPAF in our key markets. Whilst we
have seen some softness in the UK's business customer segment, reflective of a
weaker macroeconomic environment, trading with our domestic customers and the
remainder of the business has been robust.
We have opened a further two new stores in the period in Spain and added five
new stores or extensions in the UK, Paris and Spain to our pipeline which
represents 19% of our existing portfolio's MLA. We anticipate that our
pipeline will continue to grow over the coming months. Our strong and flexible
balance sheet has significant funding capacity, allowing us to continue to
consider and execute strategic investments as and when they arise. Whilst the
pipeline and associated financing will be dilutive to earnings in the near
term, the returns generated by new stores are reliable and we are confident
that it will be significantly value-accretive as the new sites mature.
Alongside our attractive development pipeline, we continue to prioritise the
significant upside from filling our 1.7m 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.
For 2023, we anticipate that the business will deliver Adjusted Diluted EPRA
Earnings per Share(7) towards the lower end of the range of analysts'
forecasts(8) of 47.3p to 50.3p".
Business Highlights
UK Trading Performance
UK Operating Performance Q3 2023 Q3 2022(2) Change
Revenue (£'m) 42.1 41.3 1.9%
Revenue (£'m)- year-to-date (YTD) 123.8 120.2 3.0%
Closing Occupancy (let sq ft- million)(3) 4.611 4.768 -3.3%
Closing Occupancy (% of MLA) 80.5% 85.2% -4.7ppts
Maximum Lettable Area (MLA)(4) 5.730 5.600 2.3%
Average Storage Rate (£) 29.73 28.50 4.3%
Average Storage Rate (£)- YTD 30.24 28.52 6.0%
REVPAF(9) (£)- YTD 28.89 28.71 0.6%
UK Operating Performance- like-for-like(3) Q3 2023 Q3 2022(2) Change
Revenue (£'m) 41.0 40.7 0.7%
Revenue (£'m)- year-to-date (YTD) 121.1 118.7 2.0%
Closing Occupancy (let sq ft- million)(4) 4.536 4.725 -4.0%
Closing Occupancy (% of MLA)(5) 81.8% 85.8% -4.0ppts
Average Occupancy (let sq ft- million) 4.451 4.635 -4.0%
Average Occupancy (let sq ft- million)- YTD 4.383 4.563 -3.9%
Average Storage Rate (£) 29.80 28.54 4.4%
Average Storage Rate (£)- YTD 30.30 28.56 6.1%
REVPAF(9) (£)- YTD 29.18 28.81 1.3%
The UK built on an extremely strong third quarter in 2022 (like-for-like
revenue growth of 10.7%) with like-for-like revenue growth of 0.7% and total
revenue growth of 1.9% in the quarter. Like-for-like average storage rate was
up 4.4% in the quarter compared to the prior year and offset an average
occupancy decline of 4.0% as the Group looks to find an appropriate balance of
rate growth and occupancy performance in order to maximise revenue.
The like-for-like occupancy inflow in the quarter was 185,000 sq ft (Q3 2022;
210,000 sq ft) resulting in closing like-for-like occupancy of 81.8% (Q3 2022:
85.8%).
Over the last two quarters our domestic customer performance has been robust
whilst business customer demand has been softer. In Q3 2023 the year-on-year
decline in the like-for-like occupancy inflow was driven by business customers
whilst we saw a year-on-year improvement from our domestic customers. Two
thirds of the decline in our like-for-like closing occupancy, compared to Q3
2022, was driven by business customers. As at Q3 2023, the like-for-like
occupancy in sq ft is down 4.0% with domestic occupancy down 2.2% and business
occupancy down 6.5%.
REVPAF has grown by 1.3% for the year-to-date and was flat in the quarter
compared to Q3 2022.
Enquiry levels for the third quarter, whilst 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) Q3 2023 Q3 2022(2) Change
Revenue (€'m) 12.72 12.33 3.2%
Revenue (€'m)- year-to-date (YTD) 37.53 36.13 3.9%
Closing Occupancy (let sq ft- million)(3) 1.118 1.128 -0.9%
Closing Occupancy (% of MLA) 82.1% 82.8% -0.7ppts
Average Occupancy (let sq ft- million) 1.104 1.114 -0.9%
Average Occupancy (let sq ft- million)- YTD 1.098 1.096 0.2%
Maximum Lettable Area (MLA)(4) 1.360 1.360 -
Average Storage Rate (€) 41.87 40.16 4.3%
Average Storage Rate (€)- YTD 41.97 40.31 4.1%
REVPAF(9) (€)- YTD 36.85 35.47 3.9%
Revenue (£'m) 10.9 10.5 3.8%
Revenue (£'m)- year-to-date (YTD) 32.7 30.5 7.2%
Our Paris business had a solid quarter growing total and like-for-like revenue
by 3.2% year-on-year.
Like-for-like occupancy performance was slightly down on Q3 2022 with closing
occupancy at 82.1%, down 0.7ppts compared to Q3 2022. The occupancy inflow in
the quarter was 27,000 sq ft (Q3 2022; 30,000 sq ft).
The like-for-like average rate performed well and was up by 4.3% which offset
the slight decline in occupancy leading to like-for-like revenue growth of
3.2%.
Sterling equivalent like-for-like revenue was impacted by the 1.2% weakening
in the Sterling:Euro exchange rate for the quarter compared to Q3 2022. As a
result, sterling equivalent total and like-for-like revenue grew by 3.8%
compared to Q3 2022.
Our industry leading REVPAF has grown by 3.9% in the year-to-date.
Enquiry levels for the third quarter were broadly in line with the same period
in 2022.
Spain Trading Performance(6)
Spain Operating Performance Q3 2023 Q3 2022(2) Change
Revenue (€'m) 1.11 0.91 22.0%
Revenue (€'m)- year-to-date (YTD) 3.06 2.63 16.3%
Closing Occupancy (let sq ft- million)(3) 0.133 0.099 34.3%
Closing Occupancy (% of MLA) 40.3% 91.6% -51.3ppts
Maximum Lettable Area (MLA)(4) 0.330 0.110 200.0%
Average Storage Rate (€) 30.43 33.19 -8.3%
Average Storage Rate (€)- YTD 33.51 33.78 -0.8%
REVPAF(9) (€)- YTD 12.45 32.58 -61.8%
Revenue (£'m) 1.0 0.8 25.0%
Revenue (£'m)- year-to-date (YTD) 2.7 2.2 22.7%
Spain Operating Performance- like-for-like(3) Q3 2023 Q3 2022(2) Change
Revenue (€'m) 0.89 0.91 -2.2%
Revenue (€'m)- year-to-date (YTD) 2.69 2.63 2.3%
Closing Occupancy (let sq ft- million)(3) 0.090 0.099 -9.1%
Closing Occupancy (% of MLA) 82.8% 91.0% -8.2%ppts
Average Occupancy (let sq ft- million) 0.088 0.097 -9.3%
Average Occupancy (let sq ft- million)- YTD 0.087 0.094 -7.4%
Average Storage Rate (€) 35.10 33.24 5.6%
Average Storage Rate (€)- YTD 36.48 33.80 7.9%
REVPAF(9) (€)- YTD 33.18 32.57 1.9%
Revenue (£'m) 0.8 0.8 -
Revenue (£'m)- year-to-date (YTD) 2.4 2.2 9.1%
In the quarter, our Spanish business grew revenue by 22.0% in total with
like-for-like revenue declining by 2.2%.
The like-for-like average storage rate grew by 5.6% to €35.10 compared to
€33.24 for Q3 2022. This increase in the like-for-like average rate in
addition to an increase in like-for-like ancillary revenues of 8.5% were
offset by a reduction in like-for-like average occupancy of 9.3% to drive the
like-for-like revenue decline of 2.2%.
Like-for-like occupancy in Barcelona has initially been diluted by the new
Central Barcelona 2 and Barcelona 3 stores having opened in close proximity
and within the same catchment area as an existing store. Management believes
that, given the limited supply in central Barcelona, once the absorption phase
has been passed, the stores will generate higher revenue and profits and
provide significant long-term value.
The reduction in total occupancy to 40.3% reflects the dilutive effect of
recent store openings.
Sterling equivalent like-for-like revenue was impacted by the 1.2% weakening
in the Sterling:Euro exchange rate for the quarter compared to Q3 2022. As a
result, sterling equivalent total and like-for-like revenue was flat compared
to Q3 2022.
Following the acquisition of four stores in Barcelona at the end of 2019, the
business has built scale quickly by opening six new sites and adding a
pipeline of six stores across Barcelona, Madrid and Pamplona. We look with
confidence to the continued expansion of the 16-store portfolio.
Benelux Trading Performance
Our Netherlands and Belgium businesses, acquired on 30 March 2022, contributed
€2.89m revenue in the period and €8.36m in the year-to-date.
The Benelux businesses grew revenue by 17.0% compared to the third quarter of
2022 and the businesses ended the period with a combined closing occupancy of
79.8%.
For the year-to-date, total revenue has increased by €5.1m compared to Q3
2022.
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, further details of which are set out
below.
Property Pipeline Developments
Openings of New Stores and Extensions in the period
Open 2023 FH/LH Opening Date MLA Other
New Developments
Eastern Madrid FH Q3 2023 50,000 Conversion
South Barcelona FH Q3 2023 30,600 Conversion
Two new freehold stores in Eastern Madrid and South Barcelona were opened in
the period adding 80,600 sq ft of MLA. The Spanish business now operates ten
stores and has a pipeline of a further six.
New Development Sites
Three new sites have been added to the development pipeline in the third
quarter.
Eastleigh
We have added a new freehold site at Eastleigh in Hampshire. This store will
operate as a satellite to our Winchester and two Southampton stores. The
conversion of an existing building is underway and we anticipate opening a
14,000 sq ft store in 2024.
Watford
The Group has been working on the acquisition of a prominent freehold site on
the A4178 close to central Watford for over two years. The acquisition has now
completed and, subject to planning, we anticipate opening a 46,750 sq ft new
build store in 2025.
Pamplona (Spain)
The Group's strategy in Spain is to develop clusters of stores in key cities
and regions. The Basque Country has a population of two million people and
enjoys a dynamic and healthy economy. We have acquired our first site in this
region in Pamplona which itself has a population of 209,000 people in the city
and 355,000 in the wider metropolitan area.
Subject to planning, the Group will convert an existing building into a 71,000
sq ft freehold store which, we anticipate, will open in 2025.
New Store Extensions
During the quarter we have identified the opportunity to extend two stores via
the acquisition of additional buildings or the extension of existing sites.
These are expected to further enhance our return on investment at these
locations.
The extensions at Holloway in London and Poissy in Paris will collectively add
21,500 sq ft and will open in 2024.
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 which can be
funded from our existing financial resources. This pipeline of c. 1.5m sq ft
represents c. 19% of our existing property portfolio.
As illustrated in our half year results presentation, the pipeline and
associated financing is dilutive to earnings in the near term but, as the
stores mature, we are confident that significant earnings and value accretion
will be realised.
Opening 2023 FH/LH Status* MLA Other
Redevelopments and Extensions
London- Paddington Marble Arch LH C 8,400 Extension
New Developments
Ellesmere Port FH C, UC 55,000 New build
Central Barcelona 3 LH C 14,700 Conversion
Amersfoort- Netherlands FH C, UC 58,000 New build
Opening 2024
Redevelopments and Extensions
London- Holloway FH C, STP 9,500 Extension
Paris- Poissy FH C, UC 12,000 Extension
Paris- Pyrenees LH C, UC 22,200 Extension
New Developments
London- Paddington Park West FH C, UC 13,000 Conversion, Satellite
London- Lea Bridge FH C, UC 76,500 New build
Eastleigh LH C, UC 14,000 Conversion, Satellite
London- Romford FH C, STP 41,000 New build
Paris- South Paris FH C, UC 55,000 New build
Paris- West 3 FH C, UC 58,000 New build
Paris- East 1 FH CE, PG 60,000 Conversion
Paris- North West 1 FH C, STP 54,000 Conversion
South West Madrid FH C, STP 46,800 Conversion
Southern Madrid 2 FH C, UC 68,800 Conversion
Central Barcelona 2 LH C, PG 20,400 Conversion
North East Madrid FH CE, STP 66,000 Conversion
Almere- Netherlands FH C, UC 44,500 Conversion
Aalsmeer- Netherlands FH C, UC 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, PG 20,700 Conversion
London- Watford FH CE, STP 46,750 New build
London- Wembley FH C, STP 49,000 New build
Paris- West 1 FH CE, PG 56,000 New build
Paris- La Défense FH C, UC 44,000 Mixed use facility
Pamplona FH C, STP 71,000 Conversion
Amsterdam- Netherlands FH CE, STP 61,400 New build
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
Shoreham FH CE, STP 54,000 New build
Total Pipeline MLA (let sq ft- million) c. 1.523
Total Outstanding CAPEX (£'m) c. 135.0
*C = completed, CE = contracts exchanged, STP = subject to planning, PG =
planning granted, UC = under construction
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 - Q3 2022 is the quarter ended 31 July 2022.
3 - Occupancy excludes offices but includes bulk tenancy. As of 31 July 2023,
closing occupancy includes 18,000 sq ft of bulk tenancy (31 July 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 49.1p. The
thirteen analyst forecasts range from 47.3p to 50.3p
9 - REVPAF is an alternative performance measure used by the business. REVPAF
stands for Revenue per Available Square Foot and is calculated by dividing
revenue for the period by weighted average available square feet for the same
period.
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 187
stores on 31 July 2023, comprising 132 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, 10 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 July 2023, Safestore had a maximum lettable area ("MLA")
of 8.080 million sq ft (excluding the expansion pipeline stores) of which
6.389 million sq ft was occupied.
· Safestore employs around 750 people in
the UK, Paris, Spain, the Netherlands, and Belgium.
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