Safestore Regulatory News (SAFE)

16 February 2021

Safestore Holdings plc

First quarter trading update for the period 1 November 2020 to 31 January 2021

Continued momentum results in strong Q1 performance

Highlights 

· Group revenue for the quarter in CER1 up 9.8% and 11.3% at actual exchange rates.

· Like-for-like5 Group revenue for the quarter in CER1 up 6.6%

o UK up 8.3%

o Paris up 1.6%

· Like-for-like5 occupancy up 6.9ppts at 80.6% (2020: 73.7%)

o UK up 7.8ppts at 80.8% (2020: 73.0%)

o Paris up 3.1ppts at 79.8% (2020 76.7%)

· Like-for-like5 average rate down (0.9%) in CER1.

o UK down (0.1%)

o Paris down (1.8%)

· New 18-year lease agreed on Hayes store commencing in June 2027 on expiry of current lease

· In December 2020, the Group's joint venture with Carlyle acquired the three-store portfolio of Opslag XL in the Netherlands. Safestore's equity investment in the joint venture, relating to Opslag XL, was c.€0.9m funded from the Group's existing resources.

· Recent store openings and acquisitions (including owned through the Group's joint venture) performing in line with or ahead of business plans

Frederic Vecchioli, Chief Executive Officer commented:

"I am pleased to report that the strong performance of the final quarter of our 2020 financial year has continued throughout the first quarter of 2021 driven by an excellent UK result, complemented by solid performances from Paris and Spain. In addition, our JV with Carlyle, operating in Belgium and the Netherlands, is performing in line with its business plan.

"Our recently opened developments in the UK in Carshalton, Sheffield and Gateshead are performing well and our Birmingham Middleway and Paris Magenta stores are due to open in the first half of 2021. We anticipate that our new store pipeline will grow over the coming months and our strong and flexible balance sheet provides significant funding capacity, allowing us to continue to consider strategic, value-accretive investments as and when they arise.

"Our priority, and largest opportunity, remains the significant upside from filling the 1.4m square feet of fully invested currently unlet space in our UK, Paris and Barcelona markets. Whilst the potential for disruption arising from current COVID restrictions remains, the inherent resilience of our business model as well as our recent and current trading allows me to look forward with confidence. The first quarter's trading performance has provided us with a strong base for the rest of the financial year and, if the current momentum continues, we would anticipate that the business delivers Adjusted Diluted EPRA Earnings per Share7 for 2020/21 towards the top of the range of analysts' forecasts8".

Business highlights

UK Trading Performance

The UK has performed very strongly in the first quarter of 2021. Like-for-like revenue growth of 8.3% was driven by an excellent occupancy performance, whilst maintaining the like-for-like average rate, finishing the quarter at £24.32 (2020: £24.34). The like-for-like closing occupancy, as measured by sq ft occupied, was up 11.6% and like-for-like closing occupancy at the end of the quarter as a percentage of MLA was up 7.8ppts at 80.8% (2020: 73.0%). The occupancy performance was strong across the UK with Regional UK slightly out-performing London and the South East. Like-for-like ancillary revenues were up 1.6% in the period, continuing the improving momentum seen in Q4 2020.

Total revenue growth of 10.9% reflected the like-for-like growth as well as the 2020 store openings in Carshalton, Gateshead and Sheffield and the annualisation of the acquisitions of our St John's Wood and Chelsea stores. The UK also benefited from the contribution of management fees from our joint venture operations in the Netherlands and Belgium (included in ancillary revenues) which is managed by our UK team. All acquisitions and new store developments are performing in line with or ahead of their business cases, with our new store at Birmingham-Middleway expected to open in the first half of 2021.

Paris Trading Performance

Our Paris business had a good quarter, growing total and like-for-like storage revenue by 1.6%. Like-for-like occupancy performance was strong for the quarter with closing occupancy at 79.8%, up 3.1ppts compared to 2020. The like-for-like average rate, which was down by (1.8%), partially offset the occupancy growth. Like-for-like ancillary revenues showed improving momentum and were up 2.1%.

Sterling equivalent revenue was impacted by the 5.2% weakening in the Sterling: Euro exchange rate for the quarter compared to Q1 2020. As a result, sterling equivalent total and like-for-like revenue grew by 7.4% compared to Q1 2020.

Our new 50,000 sq ft store in central Paris at Boulevard Magenta is anticipated to open in the first half of 2021.

Barcelona Trading Performance6

Our Barcelona business which was acquired in December 2019, continued, as expected, to see a small seasonal outflow of occupancy and ended the quarter at a closing occupancy of 88.6% (2020: 88.6%). However, the average rate grew by 4.2% to €31.09 compared to €29.85 for Q1 2020.

Lease Extensions and Assignments

In the period, we agreed a new 18-year lease on our Hayes store which starts at the expiry of the current lease in June 2027. The new lease is protected under the Landlord and Tenant Act. A six-month rent-free period was granted immediately under the current lease with a further three-month rent-free period when the new lease commences.

As part of our ongoing asset management programme, we have now extended the leases on 23 stores or 64% of our leased store portfolio in the UK since 2012.

Joint Venture with Carlyle- Investment in Opslag XL

As announced as part of our 14 January 2021 results announcement, the Group's joint venture with Carlyle acquired the three-store portfolio of Opslag XL in the Netherlands in December 2020. Safestore's equity investment in the joint venture, relating to Opslag XL, was c.€0.9m funded from the Group's existing resources. Safestore also earns a fee for providing management services to the joint venture. Safestore expects to earn an initial return on investment of 12% before transaction related costs for the first full year reflecting its share of expected joint venture profits and fees for management services.

Opslag XL has three locations in The Hague, Hilversum and Amsterdam. The Hague and Hilversum are freehold; the Amsterdam store is a short leasehold (December 2021). The business had 7,000 sq metres (75,000 sq ft) of MLA and an occupancy of 58%. This acquisition complements the six stores in Amsterdam and Haarlem in the Netherlands acquired in August 2019. In total, the joint venture will own stores with 53,300 sq metres (574,000 sq ft) of MLA.

The Group's further investment in the joint venture is has been immediately accretive to Group earnings per share from completion and will support the Group's future dividend capacity.

Our joint venture provides an earnings-accretive opportunity to gain detailed operational exposure to new markets while carefully managing the investment risk. The Group's leading digital platform has already delivered substantial marketing benefits both in terms of costs and in terms of volume of enquiries. The operational integration has been completed in an efficient manner, leveraging the skills and capacities of our existing Head Offices in the UK and Paris.

Our local property development team also enables us to further our understanding of local property markets, which will allow the Group to allocate equity investment efficiently with a risk/reward profile similar to that of our historical core markets.

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 2020 is the quarter ended 31 January 2020.

3 - Occupancy excludes offices but includes bulk tenancy. As at 31 January 2021, closing occupancy includes 14,000 sq ft of bulk tenancy (31 January 2020: 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 Barcelona business was acquired on 30 December 2019. As a result, only one month of revenue is included in the comparative quarter, Q1 2020.

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 is 32.6p. Analyst forecasts range from 31.2p to 34.6p.

This announcement contains inside information.

Enquiries

Notes to editors:

· Safestore is the UK's largest self-storage group with 159 stores at 31 January 2021, comprising 127 wholly owned stores in the UK (including 71 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), 28 wholly owned stores in the Paris region and 4 stores in Barcelona. In addition, the Group operates 9 stores in the Netherlands and 6 stores in Belgium 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 75,000 personal and business customers.

· As at 31 January 2021, Safestore had a maximum lettable area ("MLA") of 6.871 million sq ft (excluding the expansion pipeline stores, and the Carlyle Joint Venture) of which 5.506 million sq ft was occupied.

· Safestore employs around 660 people in the UK, Paris and Barcelona.