Safestore Regulatory News (SAFE)

7 September 2021

Safestore Holdings plcThird quarter trading update for the period 1 May 2021 to 31 July 2021

Strong Trading Momentum Continues

Further upgrade to full year earnings guidance

Highlights

Frederic Vecchioli, Chief Executive Officer commented:

"Safestore's unique business model, which combines advanced digital marketing and pricing analytics, a well-located portfolio with extensive pipeline, and a focus on store team sales skills, has once again delivered market leading results. I would like to thank our staff for continuing to perform excellently during the period.

"I am pleased to report that the strong trading momentum in the first half of the year has continued in the third quarter. The Group closing occupancy at 31 July 2021 was 5.985m sq ft, up 15.5% on 2020, and stood at 85.7%, up 10.1ppts on 2020. Rate was broadly flat but moved into positive territory on a like-for-like basis in CER (+0.6%) and move-in rates for new customers have been trending upward year-on-year in the UK, France and Spain. Our JV with Carlyle, operating in Belgium and the Netherlands, continues to perform in line with its business plan.

"We continue to focus on the significant upside from filling the 1.0m square feet of fully invested currently unlet space in our UK, Paris and Spain markets as well as the 0.7m of additional pipeline capacity. As the awareness and adoption of self-storage continues to increase, the Group, with its scale and expertise as well as existing funding capacity, is very well positioned to continue to grow its portfolio further.

"Whilst there is still potential for disruption from the COVID-19 pandemic, the inherent resilience of our business model as well as the momentum which has continued in the third quarter, gives the Board further confidence in relation to the outlook for the full year. We now anticipate that the business should deliver Adjusted Diluted EPRA Earnings per Share7 for 2020/21 of in a range of 39.5p to 40p which would represent an increase of c.31% to 32.5% compared to the prior year."

Business highlights

UK Trading Performance

The UK business performed very strongly in the third quarter with total revenue up 24.7%. Like-for-like storage revenue increased 22.4% whilst the performance of ancillary revenues improved significantly with growth of 24.6% compared to Q3 2020. As a result, total like-for-like revenue was up 22.8% for the quarter. For the year-to-date, like-for-like revenue was up 14.5% compared to 2020.

The strong UK result was driven by an excellent occupancy performance. Like-for-like average occupancy grew by 19.3% compared to Q3 2020 and the like-for-like closing occupancy at the end of April 2021 was up 11.8ppts at 87.6% (2020: 75.8%). The third quarter saw a like-for-like occupancy inflow of 274,000 sq ft compared to an inflow of 291,000 sq ft in Q3 2020. The third quarter in 2020 was particularly strong as trading bounced back after the initial COVID-19 lockdowns so it is pleasing to see a similar performance in the current year. Like-for-like average rate was up 2.4% for the quarter and 0.9% for the year-to-date.

Total revenue growth of 24.7% reflected the strong like-for-like performance, the 2020 store openings in Carshalton, Gateshead and Sheffield, the annualisation of the acquisitions of our St John's Wood and Chelsea stores, the 2021 opening of our Birmingham Middleway store and management fees from our Joint Venture with Carlyle. All acquisitions and new store developments are performing in line with or ahead of their business cases.

In August 2021, the first month of the fourth quarter, the momentum continued with total revenue growth of 27.5% driven by strong rate growth.

Paris Trading Performance

Paris had a strong quarter, with revenue growth accelerating from the first half of the year to 5.6% compared to last year.

For the current year-to-date, all stores in the portfolio, except Paris Magenta, are classified as like-for-like. Paris Magenta opened in late April 2021 but public road works, expected to conclude during September 2021, have limited access to the store which has, therefore, not contributed meaningfully to revenue at the period end.

Occupancy performance was robust for the quarter: average occupancy grew by 7.4% with closing occupancy at 81.7%, up 3.2ppts compared to 2020. The third quarter saw an occupancy inflow of 39,000 sq ft compared to an inflow of 45,000 sq ft in Q3 2020. Excluding the MLA of Paris Magenta, the closing occupancy was 84.7%, up 6.2ppts compared to Q3 2020.

The average storage rate was down 2.0% for the quarter although the rate grew by 0.4% compared to the second quarter of 2021, and the average rate paid by new customers was higher than in the same quarter last year. Ancillary revenues were strong, growing by 7.1% in the quarter.

In August 2021, the first month of the fourth quarter, total revenue growth was 8.1%.

Sterling equivalent revenue was up 1.0% for the quarter reflecting a 4.4% strengthening in the average Sterling: Euro exchange rate. For the year-to-date sterling revenue was up 3.1% reflecting a 0.2% weakening in the average exchange rate over the nine-month period.

Spain Trading Performance

Our Spanish business, which was acquired in December 2019 and is, therefore, not considered like-for-like, grew revenue by 8.3% in the quarter to €0.8m. Revenue for the nine months was €2.4m (2020: €1.7m for seven months). Closing occupancy in sq ft was down 1.0% whilst average rate in the year-to-date grew by 4.8% to €31.55 (2020: €30.10) with ancillary revenues improving strongly. Closing occupancy was 90.4% (2020: 93.5%).

Property Pipeline

Our pipeline of future development opportunities remains strong and gives us further confidence for our future growth plans.

New development site- Shoreham

In July 2021, the Group exchanged contracts on a freehold 0.8 acre site in Shoreham, West Sussex. Shoreham is situated between Brighton and Worthing on the south coast of England. Subject to planning, we will open a purpose built 54,000 sq ft MLA store in Q4 of 2022.

New development site- Southern Paris

In August 2021, the Group exchanged contracts on a freehold site in Southern Paris with a significant frontage onto the N104 motorway. The site includes an existing building which will be demolished and replaced by a 55,000 sq ft MLA store. Subject to planning we expect the store to open in the third quarter of 2022.

New development site- Central Barcelona 2

In August 2021, the Group exchanged contracts on a leasehold site in Central Barcelona. The site is a former car dealership which will be converted to a 19,000 sq ft MLA store which, subject to planning, should open in Q2 of 2022.

Planning permissions- Central Barcelona 1 and Southern Madrid

Our Central Barcelona 1 (13,500 sq ft of MLA) and Southern Madrid (29,000 sq ft of MLA) stores, announced previously, were granted planning permission in August 2021 and are expected to open in the first and third quarters of 2022 respectively.

The Group now has a property pipeline of 702,000 sq ft of MLA with a total remaining capital expenditure requirement of c. £100m over the next four years, which the Group intends to self-finance. The pipeline comprises sites in London and the South East of England, Paris, Barcelona and Madrid. Full details are set out below.

Property Pipeline Summary

Ends

Notes

1 - Where reported numbers are presented either to the nearest £01.m or to the nearest 10,000 sq ft, the effect of rounding may impact the reported percentage change.

2 - 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).

3 - Q3 2020 is the quarter ended 31 July 2020.

4 - 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.

5 - Closing occupancy excludes offices but includes 14,000 sq ft of bulk tenancy as at 31 July 2021 (31 July 2020 - 14,000 sq ft).

6 - MLA is Maximum Lettable Area.

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 both 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.

Enquiries

Notes to editors: