Shurgard is 'priced for perfection', BofA cuts to 'neutral'

Shurgard Self Storage

26/11/2021 12:26

** BofA Securities cuts Shurgard Self Storage  SHUR.BR  to
"neutral" from "buy" as rising non-real estate investment trust
taxes drag the group's share price performance
    ** "We see this higher (income) tax the reason behind the
board's decision to freeze its dividend at this year's level for
the next three years," the brokerage says
    ** Contrary to its two peers Safestore  SAFE.L  and Big
Yellow  BYG.L , Shurgard pays corporate taxes both on income and
gains on disposals, BofA flags
    ** But in the opposite, it adds the Belgian company has no
mandatory requirements to distribute a minimum dividend based on
pay-out ratio on income, usually at 80% or above
    ** The stock of Shurgard is "priced for perfection", the
broker notes, as the overall tax burden represents around EUR 20
per share and offsets larger investments
    ** BofA, however, raises its target price by 34%, citing
enhanced demand on the back of new behaviours such as housing
renovation or creation of work-from-home space
    ** "We forecast pricing power to benefit from a historically
high occupancy rate and constrained supply in dense areas:
London, Paris, Randstad and Stockholm," it adds
    ** Of 12 analysts covering Shurgard, which is up more than
57% year-to-date, one rates it "strong buy", three "buy" and
eight "hold"

($1 = 0.8864 euros)

 (Reporting by Juliette Portala)
 ((juliette.portala@tr.com))