Safestore Holdings PLC

Earnings Release • Sep 8, 2022

National Storage Mechanism | Additional information

RNS Number : 6868Y

Safestore Holdings plc

08 September 2022

8 September 2022

Safestore Holdings plc

Third quarter trading update for the period 1 May 2022 to 31 July 2022

Strong trading continues in Q3 2022

Group Operating Performance	Q3 2022	Q3 20212	Change	Change- CER1
Revenue (£'m)	54.7	47.6	14.9%	15.1%
Revenue (£'m)- year-to-date (YTD)	155.7	135.7	14.7%	15.6%
Closing Occupancy (let sq ft- million)3	6.461	5.985	8.0%	n/a
Closing Occupancy (% of MLA)	84.3%	85.7%	-1.4ppts	n/a
Maximum Lettable Area (MLA)4	7.670	6.980	9.9%	n/a
Average Storage Rate (£)	28.59	26.26	8.9%	9.1%
Average Storage Rate (£)- YTD	29.11	26.43	10.1%	11.1%

Group Operating Performance- like-for-like3	Q3 2022	Q3 20212	Change	Change- CER1
Revenue (£'m)	51.7	47.3	9.3%	9.5%
Revenue (£'m)- year-to-date (YTD)	150.8	134.8	11.9%	12.8%
Closing Occupancy (let sq ft- million)4	5.889	5.944	-0.9%	n/a
Closing Occupancy (% of MLA)5	85.7%	87.0%	-1.3ppts	n/a
Average Occupancy (let sq ft- million)	5.788	5.864	-1.3%	n/a
Average Occupancy (let sq ft- million)- YTD	5.702	5.618	1.5%	n/a
Average Storage Rate (£)	29.73	26.34	12.9%	13.1%
Average Storage Rate (£)- YTD	29.70	26.50	12.1%	13.0%

Highlights

·      Group revenue for the quarter in CER1 up 15.1% and 14.9% at actual exchange rates

·      Like-for-like5 Group revenue for the quarter in CER1 up 9.5%

o  UK up 10.7%

o  Paris up 4.8%

o  Spain up 8.3%

·      Like-for-like5 average rate up 13.1% in CER1

o  UK up 15.7%

o  Paris up 4.8%

o  Spain up 5.6%

·      Like-for-like5 occupancy at 85.7% (2021: 87.0%)

o  UK down 1.7ppts at 85.8% (2021: 87.5%)

o  Paris up 0.1ppts at 84.8% (2021 84.7%)

o  Spain up 1.2ppts at 91.6% (2021: 90.4%)

·      Acquired two new freehold development sites in South West Madrid and Almere (Netherlands), adding 91,000 sq ft of MLA to the pipeline.

·      Central Barcelona store and Wimbledon London store extension now open together adding 22,000 sq ft of MLA

·      Group Property Pipeline of 1,073,000 sq ft representing c. 14% of the existing portfolio

Frederic Vecchioli, Chief Executive Officer, commented:

"I am pleased to report that the Group's strong first half performance has continued into the third quarter of 2022, driven by excellent revenue growth in the UK market, strong performances in our Parisian and Spanish businesses, and four months' contribution from our recently acquired Benelux business. Like-for-like enquiries in August 2022, the first month of our final quarter, are at record levels.

"Our new store pipeline represents c.14% of our existing portfolio's MLA, which we anticipate will continue to grow over the coming months. Our strong and flexible balance sheet has significant 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, yet we still have 1.2m square feet of fully invested currently unlet space in our UK, Paris, Spain and Benelux markets (not including our pipeline). Our most significant upside opportunity is from filling this space and that remains our priority. The business has demonstrated its inherent resilience in recent times and, with our recent and current trading, allows me to look forward with confidence. The first three quarters' trading performance has provided us with a strong base for the rest of the financial year and we anticipate that the business will deliver Adjusted Diluted EPRA Earnings per Share7 for 2021/22 in line with the previous guidance of at least 47p".

Business Highlights

UK Trading Performance

UK Operating Performance	Q3 2022	Q3 20212	Change
Revenue (£'m)	41.3	36.9	11.9%
Revenue (£'m)- year-to-date (YTD)	120.2	104.1	15.5%
Closing Occupancy (let sq ft- million)3	4.768	4.775	-0.1%
Closing Occupancy (% of MLA)	85.2%	86.6%	-1.4ppts
Maximum Lettable Area (MLA)4	5.600	5.510	1.6%
Average Storage Rate (£)	28.50	24.68	15.5%
Average Storage Rate (£)- YTD	28.52	24.67	15.6%

UK Operating Performance- like-for-like3	Q3 2022	Q3 20212	Change
Revenue (£'m)	40.5	36.6	10.7%
Revenue (£'m)- year-to-date (YTD)	118.3	103.2	14.6%
Closing Occupancy (let sq ft- million)4	4.677	4.734	-1.2%
Closing Occupancy (% of MLA)5	85.8%	87.5%	-1.7ppts
Average Occupancy (let sq ft- million)	4.590	4.671	-1.7%
Average Occupancy (let sq ft- million)- YTD	4.521	4.456	1.5%
Average Storage Rate (£)	28.65	24.76	15.7%
Average Storage Rate (£)- YTD	28.67	24.74	15.9%

The UK performed strongly in the third quarter with total revenue up 11.9% and like-for-like revenue up 10.7%. For the year-to-date, like-for-like revenue was up 14.6% compared to 2021.

The UK result was driven by an excellent like-for-like average rate which remained strong and was up 15.7% on the third quarter of 2021.

As expected, the third quarter like-for-like occupancy inflow of 203,000 sq ft was strong but down on the exceptionally strong inflow of 307,000 in the third quarter of 2021. As a result, like-for-like closing occupancy was 85.8% (2021: 87.5%). The number of new lets in the quarter was up on Q3 2021, albeit the average size was lower. The addition of 40,000 sq ft of additional MLA arising from the opening of recent store extensions at London Edgware, Southend, and London Paddington Marble Arch had the impact of diluting like-for-like closing occupancy by 0.7ppts.

Total revenue for the year-to-date grew by 15.5% 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	Q3 2022	Q3 20212	Change
Revenue (€'m)	12.33	11.66	5.7%
Revenue (€'m)- year-to-date (YTD)	36.13	33.77	7.0%
Closing Occupancy (let sq ft- million)3	1.128	1.112	1.4%
Closing Occupancy (% of MLA)	82.8%	81.7%	+1.1ppts
Maximum Lettable Area (MLA)4	1.360	1.360	-
Average Storage Rate (€)	40.16	38.42	4.5%
Average Storage Rate (€)- YTD	40.31	38.59	4.5%
Revenue (£'m)	10.5	10.0	5.0%
Revenue (£'m)- year-to-date (YTD)	30.5	29.5	3.4%

Paris Operating Performance- like-for-like3	Q3 2022	Q3 20212	Change
Revenue (€'m)	12.22	11.66	4.8%
Revenue (€'m)- year-to-date (YTD)	35.90	33.77	6.3%
Closing Occupancy (let sq ft- million)4	1.113	1.112	0.1%
Closing Occupancy (% of MLA)5	84.8%	84.7%	+0.1ppts
Average Occupancy (let sq ft- million)	1.101	1.095	0.5%
Average Occupancy (let sq ft- million)- YTD	1.087	1.066	2.0%
Average Storage Rate (€)	40.29	38.43	4.8%
Average Storage Rate (€)- YTD	40.39	38.59	4.7%
Revenue (£'m)	10.4	10.0	4.0%
Revenue (£'m)- year-to-date (YTD)	30.3	29.5	2.7%

Our Paris business had a good quarter growing total revenue by 5.7% year-on-year. Like-for-like occupancy performance was robust for the quarter with closing occupancy at 84.8%, up 0.1ppts compared to Q3 2021. The like-for-like average rate, which was up by 4.8%, showed good momentum and combined with average occupancy growth of 0.5%, drove like-for-like revenue growth of 4.8%. Our like-for-like average storage rate also grew sequentially by 0.7% compared to the second quarter of our 2022 Financial Year.

Total revenue for the year-to-date grew by 7.0% reflecting the strong like-for-like performance and the 2021 opening of our Magenta store.

Sterling equivalent revenue was impacted by the 0.9% strengthening in the Sterling: Euro exchange rate for the quarter compared to Q3 2021. As a result, sterling equivalent total and like-for-like revenue grew by 5.0% and 4.0% respectively compared to Q3 2021.

Spain Trading Performance6

Spain Operating Performance- total and like-for-like3	Q3 2022	Q3 20212	Change
Revenue (€'m)	0.91	0.84	8.3%
Revenue (€'m)- year-to-date (YTD)	2.63	2.41	9.1%
Closing Occupancy (let sq ft- million)3	0.099	0.098	1.0%
Closing Occupancy (% of MLA)	91.6%	90.4%	1.2ppts
Maximum Lettable Area (MLA)4	0.110	0.110	-
Average Storage Rate (€)	33.19	31.43	5.6%
Average Storage Rate (€)- YTD	33.78	31.55	7.1%
Revenue (£'m)	0.8	0.7	14.3%
Revenue (£'m)- year-to-date (YTD)	2.2	2.1	4.8%

Our Spain business, which is now considered like-for-like, saw a strong 5,400 sq ft inflow of occupancy (2021: 1,000 sq ft) and ended the quarter strongly at a closing occupancy of 91.6% (2021: 90.4%). Average occupancy was down 1.0% but the average storage rate grew by 5.6% to €33.19 compared to €31.43 for Q3 2021. Ancillary revenue growth was strong and total revenue grew by 8.3% compared to Q3 2021.

Benelux Trading Performance

Our Netherlands and Belgium businesses were acquired on 30 March 2022 and, therefore, contributed four month's revenue (€3.3m) in the period.

Collectively, the businesses saw 21,000 sq ft of occupancy inflows in the third quarter and our Netherlands business ended the period with a closing occupancy of 75.5% whilst our Belgian business had an 81.6% occupancy.

Property Pipeline

Openings of New Stores and Extensions in the period

Spain- opening of Central Barcelona 1 store

In January 2021, the Group exchanged contracts on a freehold building in a densely populated area in central Barcelona. The conversion of the existing building into a 12,500 sq ft MLA self-storage facility is complete and the store is now open.

UK Extension completed- Wimbledon

In April 2021, we exchanged contracts on the acquisition of a 0.5-acre site adjacent to our existing London Wimbledon store (MLA 58,800 sq ft). We completed this transaction in December 2021 and construction was completed just after the period end. The existing reception area has been relocated to a more prominent and visible roadside location and a further 9,000 sq ft of storage capacity and 1,000 sq ft of offices have been added. The Wimbledon store's peak occupancy, prior to the Covid-19 pandemic, was 92%.

Development Sites

Spain

In August 2022, the Group exchanged contracts on a freehold building in a commercial and industrial area of South West Madrid. Subject to planning and completion, we will convert the existing building into a 46,800 sq ft MLA self-storage facility. It is anticipated that the site will open in the fourth quarter of 2023.

The Spanish business now has five open stores and a pipeline consisting of a further seven stores amounting to c.265,000 sq ft of MLA.

Netherlands

The Group has completed the acquisition of a freehold site in Almere, a city with a population of 214,000 which is 20 minutes' drive from Amsterdam. Subject to planning, we will convert the two existing buildings on the site into a 44,500 sq ft MLA self-storage facility. It is anticipated that the site will open in the second quarter of 2023.

Store Extensions

Paris

The Group plans to redevelop and extend its Pyrénées store in Paris. The extension will add 22,200 sq ft and is planned to open in the fourth quarter of 2023. As of July 2022, the store occupancy was 95%.

Pipeline Summary

Our pipeline of c. 1,073,000 sq ft represents c. 14% of our existing property portfolio.

Store	FH/ LH	Status	MLA sq ft	Target Opening	Other
London - Lea Bridge	FH	Completed/ planning granted	76,500	Q1 2025	New build. £170k pa of rental income prior to opening
London - Old Kent Road	FH	Completed/ subject to planning	76,500	TBC	New build. Rental income receivable prior to opening
London - Woodford	FH	Contracts exchanged/ planning granted	65,000	Q4 2025	New build
London - Morden	FH	Completed/ planning granted / under construction	52,000	Q1 2023	New build
London - Bermondsey	FH	Completed/ subject to planning	50,000	Q4 2026	New build
Shoreham	FH	Contracts exchanged/ subject to planning	54,000	Q2 2023	New build
London - Paddington Park West	LH	Completed/ planning granted	13,000	Q3 2023	Conversion of basement car park-satellite store to existing Paddington store
Wigan	FH	Completed/ conversion commenced	42,700	Q2 2023	Conversion of existing warehouse
Winchester	FH	Planning granted/ under construction	11,000	Q4 2022	Extension of existing site
Paris - La Défense	FH	Planning granted	44,000	Q2 2025	Facility within mixed use development
Paris - Southern Paris	FH	Planning granted	55,000	Q3 2022	New build
Paris - West 1	FH	Contracts exchanged/ subject to planning	56,000	Q4 2023	New Build
Paris - West 2	FH	Contracts exchanged/ subject to planning	20,000	Q4 2023	New Build
Paris - West 3	FH	Contracts exchanged/ subject to planning	58,000	Q3 2023	New Build
Paris- Pyrenees Extension	LH	Completed	22,200	Q4 2023	Extension of Existing Site
Northern Madrid	FH	Completed/ planning granted	53,000	Q1 2023	Conversion of existing building
Southern Madrid	FH	Completed/ planning granted	32,000	Q1 2023	Conversion of existing building
Eastern Madrid	FH	Contracts exchanged/ subject to planning	46,800	Q3 2023	Conversion of existing building
South West Madrid	FH	Contracts exchanged/ subject to planning	46,800	Q4 2023	Conversion of existing building
Central Barcelona 2	LH	Contracts exchanged/ subject to planning	24,700	Q4 2023	Conversion of existing building
Northern Barcelona	FH	Contracts exchanged/ subject to planning	41,500	Q2 2023	Conversion of existing building
South Barcelona	FH	Contracts exchanged/ planning granted	30,000	Q2 2023	Conversion of existing building
Amersfoort -  Netherlands	FH	Contracts exchanged/ subject to planning	58,000	Q4 2023	New build
Almere- Netherlands		Completed/ subject to planning	44,500	Q2 2023	Conversion of existing building
Total Pipeline MLA			c. 1,073k
Total Further Capex			c. £110m

Lease Extensions and Assignments

During the period we extended the lease on our Exeter store in the UK. The lease will now continue until February 2045 with tenant-only break clauses in 2035 and 2040. A six-month rent-free period was agreed as part of the renegotiation.

Site Disposal

In April 2021 we opened our Birmingham Middleway store (58,000 sq ft MLA) and closed our Digbeth store (44,500 sq ft MLA) shortly thereafter. Customers were relocated to the bigger, better located new store. At the time, we stated that we intended to sell the Digbeth site.

We are pleased to confirm that the Digbeth site sale was completed in August 2022. The proceeds received funded the entire acquisition and construction of the Middleway site. As of July 2022, the Middleway site was 81% occupied.

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 2021 is the quarter ended 31 July 2021.

3 - Occupancy excludes offices but includes bulk tenancy. As of 31 July 2022, closing occupancy includes 14,000 sq ft of bulk tenancy (31 July 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 and consists of the same four stores as were originally acquired. Consequently, the business is 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
Instinctif Partners
Guy Scarborough/ Bryn Woodward	07917 178920/ 07739 342009

Notes to Editors

·      Safestore is the UK's largest self-storage group with 178 stores on 31 July 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, 4 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 July 2022, Safestore had a maximum lettable area ("MLA") of 7.667 million sq ft (excluding the expansion pipeline stores) of which 6.461 million sq ft was occupied.

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

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