Last checked at 14 Nov 2019 07:00
Safestore Holdings plc
Fourth quarter trading update for the period 1 August 2019 to 31 October 2019
Solid final quarter with strong occupancy growth. Significant strategic progress completes another good year
Group Operating Performance | Q4 2019 | Q4 20182 | Change | Change- CER1 |
Revenue (£'m) | 40.5 | 38.3 | 5.7% | 5.7% |
Revenue (£'m)- full year | 151.8 | 143.9 | 5.5% | 5.6% |
Closing Occupancy (let sq ft- million)4 | 4.98 | 4.69 | 6.2% | n/a |
Closing Occupancy (% of MLA)5 | 77.0% | 73.6% | +3.4ppts | n/a |
Average Storage Rate (£) | 26.09 | 26.42 | (1.2%) | (1.3%) |
Average Storage Rate (£)- full year | 26.09 | 25.90 | 0.7% | 0.8% |
Group Operating Performance- like-for-like3 | Q4 2019 | Q4 20182 | Change | Change- CER1 |
Revenue (£'m) | 39.3 | 37.9 | 3.7% | 3.7% |
Revenue (£'m)- full year | 149.2 | 142.3 | 4.8% | 4.8% |
Closing Occupancy (let sq ft- million)4 | 4.86 | 4.65 | 4.5% | n/a |
Closing Occupancy (% of MLA)5 | 78.5% | 75.1% | +3.4ppts | n/a |
Average occupancy- full year (let sq ft-million) | 4.70 | 4.54 | 3.5% | n/a |
Average Storage Rate (£) | 26.11 | 26.35 | (0.9%) | (1.0%) |
Average Storage Rate (£)- full year | 26.04 | 25.78 | 1.0% | 1.0% |
Highlights
Solid Financial Performance
·; Group revenue for the year in CER1 up 5.6%
·; Like-for-like3 Group revenue for the year in CER1 up 4.8%
o UK up 4.7%
o Paris up 5.6%
·; Group like-for-like closing occupancy of 78.5% (up 3.4ppts on Q4 2018)
·; Group like-for-like average occupancy for the year up 3.5%
·; Group like-for-like average storage rate for the year up 1.0% in CER1
Strategic Progress
·; £125m of new US Private Placement Notes issued to fund medium-term growth
·; Acquisition of Fort Box Self-Storage (two London stores) for £14.3m
·; Acquisition of freehold Heathrow store for £6.5m
·; Freehold site acquired in Sheffield 47,000 sq ft store to open in H1 2020
·; New long leasehold site secured at Gateshead in North East of England
·; Sites in Peterborough and Birmingham Merry Hill now open
·; Anticipate Adjusted Diluted EPRA earnings per share6 will be in line the Board's expectations
Frederic Vecchioli, Chief Executive Officer commented:
"I am pleased to report a solid final quarter's trading concluding another strong performance for the year. In addition to the completion of our JV with Carlyle in the Netherlands, the acquisitions of Fort Box and of our new Heathrow store as well as new store openings in Peterborough and Birmingham Merry Hill demonstrate significant strategic progress.
Further to our successful openings this year, we plan to open new stores in London-Carshalton, Gateshead, Sheffield and Paris-Magenta (subject to planning) during the 2019/2020 financial year, adding 175,000 sq ft of capacity to our estate.
We have extended our financing facilities with the issuance of a further £125m of 7 and 10 year US Private Placement notes, strengthening our balance sheet and providing us with further flexibility to target selected development and acquisition opportunities as they arise.
The Company is in a very strong position and, as ever, our top priority remains the significant organic growth opportunity represented by the 1.5m square feet of currently unlet space in our existing fully invested estate. Our leading market positions in the UK and Paris combined with our resilient business model enable us to look forward to the future with confidence."
Safestore will announce its Preliminary Results for the year ended 31 October 2019 on Tuesday, 7 January 2020.
Business highlights
UK Trading Performance
UK Operating Performance | Q4 2019 | Q4 20182 | Change |
Revenue (£'m) | 30.7 | 29.0 | 5.9% |
Revenue (£'m)- full year | 114.7 | 109.0 | 5.2% |
Closing Occupancy (let sq ft- million)4 | 3.96 | 3.74 | 5.9% |
Closing Occupancy (% of MLA) 5 | 76.9% | 72.9% | +4.0ppts |
Average Storage Rate (£) | 23.83 | 24.12 | (1.2%) |
Average Storage Rate (£)- full year | 23.93 | 23.66 | 1.1% |
UK Operating Performance- like-for-like3 | Q4 2019 | Q4 20182 | Change |
Revenue (£'m) | 29.7 | 28.6 | 3.8% |
Revenue (£'m)- full year | 112.5 | 107.4 | 4.7% |
Closing Occupancy (let sq ft- million)4 | 3.88 | 3.70 | 4.9% |
Closing Occupancy (% of MLA)5 | 77.1% | 73.6% | +3.5ppts |
Average occupancy- full year (let sq ft-million) | 3.74 | 3.63 | 3.0% |
Average Storage Rate (£) | 23.75 | 24.00 | (1.0%) |
Average Storage Rate (£)- full year | 23.81 | 23.49 | 1.4% |
The UK's fourth quarter performance was solid with the business growing total revenue by 5.9% and like-for-like revenue by 3.8%. Performance was particularly strong in regional UK stores with like-for-like revenue up 5.0% whilst London and the South East grew by 2.9%.
Over the year, the business added occupancy of 173,000 sq ft on a like-for-like basis excluding Alligator (2018: 132,000 excluding Alligator). As a result, Q4 like-for-like closing occupancy, at 77.1%, increased by 3.5 percentage points compared to the prior year.
Like-for-like average rate in the UK improved in the period but was down 1.0% compared to Q4 2018. Over the year it grew by 1.4%.
Total revenue grew by 5.2% for the full year. This includes the newly acquired Heathrow store, management revenue from our Dutch joint venture business and the annualisation of 2018 new store openings in Mitcham and Paddington Marble Arch offset by 2018 closures in Deptford, Merton, Leeds and Paddington. New stores, in the initial period after opening, are dilutive to occupancy and rate. However, all new stores are trading in line or ahead of our business plans.
Paris Trading Performance
Paris Operating Performance | Q4 2019 | Q4 20182 | Change |
Revenue (€'m) | 11.0 | 10.5 | 4.8% |
Revenue (€'m)- full year | 42.1 | 39.4 | 6.9% |
Closing Occupancy (let sq ft- million)4 | 1.02 | 0.95 | 7.4% |
Closing Occupancy (% of MLA)5 | 77.4% | 76.5% | +0.9ppts |
Average Storage Rate (€) | 39.08 | 39.89 | (2.0%) |
Average Storage Rate (€)- full year | 38.93 | 39.44 | (1.3%) |
Revenue (£'m) | 9.8 | 9.3 | 5.4% |
Revenue (£'m)- full year | 37.1 | 34.9 | 6.3% |
Paris Operating Performance- like-for-like3 | Q4 2019 | Q4 20182 | Change |
Revenue (€'m) | 10.8 | 10.5 | 2.9% |
Revenue (€'m)- full year | 41.6 | 39.4 | 5.6% |
Closing Occupancy (let sq ft- million)4 | 0.98 | 0.95 | 3.2% |
Closing Occupancy (% of MLA)5 | 84.4% | 81.2% | +3.2ppts |
Average occupancy- full year (let sq ft-million) | 0.97 | 0.91 | 6.6% |
Average Storage Rate (€) | 39.53 | 40.01 | (1.2%) |
Average Storage Rate (€)- full year | 39.23 | 39.47 | (0.6%) |
Revenue (£'m) | 9.6 | 9.3 | 3.2% |
Revenue (£'m)- full year | 36.7 | 34.9 | 5.2% |
Paris had another good quarter growing revenue by 4.8% compared to last year.
On a like-for-like basis, the business grew revenue by 2.9% for the quarter and by 5.6% for the full year. This was driven by average occupancy growth of 6.6% for the year.
Like-for-like occupancy grew by 37,000 sq ft for the year (2018: 54,000 sq ft) resulting in closing occupancy of 84.4%, up 3.2 percentage points compared to the prior year.
Like-for-like average rate in Paris was down 1.2% in the quarter but, excluding our lower priced suburban Emerainville and Combs la Ville stores, which opened in September 2016 and June 2017 respectively, the average rate from the like-for-like stores was up 0.2% in the period. Similarly, the 0.6% average like-for-like rate reduction for the year would have been an improvement of 1.0% without the mix effect of these two stores.
The impact of the new stores opened in August 2018 at Poissy and in August 2019 in Pontoise is to dilute rate and occupancy in the initial period after trading commences. These stores, however, are trading ahead of our business plan.
Over the year, the sterling-euro exchange rate was similar to 2018. As a result, there was minimal foreign exchange impact on the translation of Paris revenues.
Financing
On 29 October 2019, Safestore extended its borrowing facilities with the issuance of new sterling and euro denominated US Private Placement (USPP) notes with the following coupons and tenors:
- €70m 7 year 2026 notes at a coupon of 1.26%
- £35m 7 year 2026 notes at a coupon of 2.59%
- £30m 10 year 2029 notes at a coupon of 2.69%
The USPP notes were issued to a group of institutional investors.
The proceeds have been utilised to pay down the revolving credit facility under our bank arrangements, thereby providing further capacity for medium-term growth.
The existing USPP notes and banking arrangements remain unchanged and consist of:
- A £250m revolving credit facility of which £97m is drawn
- A €70m revolving credit facility of which €39m is drawn
- €50.9m of 2024 USPP at a coupon of 1.59%
- €74.1m of 2027 USPP at a coupon of 2.00%
- £50.5m of 2029 USPP at a coupon of 2.92%
The average cost of debt of the Group remains broadly unchanged at c. 2.3% and the average tenor of our facilities has increased from 5.1 years to 6.3 years.
The Group policy remains to maintain Group Loan to Value between 30% and 40% for the foreseeable future, providing flexibility to target selected development and acquisition opportunities as they arise.
Acquisition of Fort Box
On 5 November 2019, Safestore acquired 100% of the shares of companies owning Fort Box Self Storage, which comprises two stores in London, for a consideration of £14.3m.
The stores, in the affluent areas of St John's Wood and Chelsea, have a total of 35,000 sq ft of MLA and are 79% and 69% occupied respectively at acquisition.
St John's Wood is a long leasehold store (999 years remaining) and Chelsea is a leasehold store with 20 years remaining on the lease.
The acquisition will be immediately earnings accretive with the first-year initial yield anticipated at 4.4% rising to c.9% at stabilised occupancy levels.
The Group will rebrand the stores and has taken over operation of the sites with immediate effect.
Acquisition of Heathrow store
During the quarter (as previously announced), Safestore acquired Salus Services Ltd, the owner of a 34,000 sq ft MLA freehold store from Rockpool Investments for £6.5m in cash. The store was previously operated by Ready Steady Store and is located on the Parkway Trading Estate near Heathrow Airport to the west of London.
New Store - Sheffield
In September 2019, we acquired a freehold 1.5 acre site with an existing warehouse in Sheffield. The site is located in an accessible and prominent position on the northern side of the inner ring road (A61) which is close to the city centre in a densely populated catchment area.
The site has planning consent for self-storage (the upgrade and refurbishment of the external areas are subject to planning permission). The group intends to convert the existing building into a 47,000 sq ft store which should open in the second quarter of 2020.
New Store - Gateshead
In August 2019 (as previously announced), we acquired a long leasehold 1.6 acre site with an existing building in Gateshead, North East England. The lease has 130 years remaining. Planning permission has now been granted and we plan to convert the building into a 38,000 sq ft store and anticipate opening the store in summer 2020.
New Store Openings
Our 55,000 sq ft freehold Birmingham Merry Hill store opened in October 2019.
A new site in Peterborough was acquired in January 2019. The 42,000 sq ft freehold store opened at the beginning of October 2019.
Outlook
Performance in the final quarter across the Group was as expected and we anticipate that our Adjusted Diluted EPRA earnings per share6 will be in line with the Board's expectations for the year-ended 31 October 2019. Our strong market positions and geographical diversity means that we look forward with confidence to the 2019/20 financial year.
Ends
Notes
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 2018 is the quarter ended 31 October 2018.
3 - 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.
4 - Closing occupancy excludes offices but includes 14,000 sq ft of bulk tenancy as at 31 October 2019 (31 October 2018 - 25,750 sq ft).
5 - MLA is Maximum Lettable Area.
6 - Adjusted Diluted EPRA earnings per share 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, IFRS 2 share-based payment charges, exceptional tax items and deferred tax charges. This adjusted earnings is divided by the diluted number of shares (excluding shares held by the Safestore Employee Benefit Trust).
Enquiries
Safestore Holdings plc | 020 8732 1500 |
Frederic Vecchioli, Chief Executive Officer |
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Andy Jones, Chief Financial Officer |
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www.safestore.com |
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Instinctif Partners | 020 7457 2020 |
Guy Scarborough Catherine Wickman |
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Notes to editors:
·; Safestore is the UK's largest self-storage group with 150 stores at 31 October 2019, comprising 122 wholly owned stores in the UK (including 68 in London and the South East with the remainder in key metropolitan areas such as Manchester, Birmingham, Glasgow, Edinburgh, Liverpool and Bristol) and 28 wholly owned stores in the Paris region. |
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·; 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 densest UK and French markets.
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·; 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.
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·; Safestore has been listed on the London Stock Exchange since 2007. It entered the FTSE 250 index in October 2015.
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·; The Group provides storage to around 60,000 personal and business customers.
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·; As at 31 October 2019, Safestore had a maximum lettable area ("MLA") of 6.47 million sq ft (excluding the expansion pipeline stores) of which 4.98 million sq ft was occupied.
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·; Safestore employs around 650 people in the UK and France. |