Option agreed to acquire Space Maker
11 March 2016
Safestore Holdings plc ("Safestore" or "the Group")
Option agreed to acquire Space Maker
Highlights
· Agreed option to acquire Space Maker, the ninth largest self-storage portfolio in the UK with 12 stores
· £43.0m initial consideration and £1.4m deferred consideration to be funded from existing Group debt facilities
· At the initial consideration price, the Space Maker portfolio has an implied first year net operating income yield of c.8.7%1
· Expected to be earnings accretive from completion of the acquisition
Frederic Vecchioli, Chief Executive Officer commented:
"I am pleased to announce that we have signed an option agreement to acquire the 12 store Space Maker business, which is expected to be earnings accretive from the completion of the acquisition. We have a strong operational knowledge of Space Maker, having managed the business since 2010 under a management services agreement.
"With the acquisition of our new freehold site to the east of Paris in Marnes-la-Vallée, which we announced last month, these transactions demonstrate our ability to take advantage of selected development and acquisition opportunities, supported by our strong balance sheet.
"Following these acquisitions, and the openings of our new stores at Chiswick, Birmingham and Wandsworth later this year, Safestore will have a total of 134 stores, of which 109 are in the UK and 25 in Paris, consolidating our leading positions in both markets."
Space Maker option
Safestore is pleased to announce it has entered into a put and call option agreement to acquire Space Maker Stores Ltd ("SMS") from Allodial Capital Ltd and James Elton (the "Vendors"). An initial consideration of £43.0m less certain downward adjustments to the enterprise value ("initial consideration") will be payable in cash on completion of the acquisition. Up to £1.4m of deferred consideration ("deferred consideration") may become payable in cash between six months and three years from the date of completion, subject to the SMS business achieving certain performance targets during that period.
SMS is the ninth largest self-storage portfolio in the UK with 12 stores located in Bournemouth (two stores), Colchester, Redhill, Romford, Brentford, Chelmsford, Exeter, Leeds, Plymouth, Portsmouth and Poole, and has a built out lettable area of c.496,000 sq ft. Six of the SMS stores are freehold or long leasehold and six are leasehold stores with an average remaining lease length of 16.6 years.
Safestore has a strong operational knowledge of the SMS portfolio, having managed the SMS business since 2010 under a management services agreement ("MSA"). The MSA, for which Safestore received £0.6m per annum, was due to expire at the end of April 2016. It will now continue until completion of the acquisition.
This acquisition will reinforce Safestore's position as the leading operator in the UK by number of stores with a combined total of 109 stores2, 63 of which will be in London and the South East. The SMS portfolio is currently operating at 61% occupancy (of built out lettable area) which Safestore believes it can improve once fully integrated into its own operational platform.
In the year to 30 April 2015, SMS delivered EBITDA (before management fees) of £3.4m on turnover of £8.2m. At the initial consideration price, the SMS portfolio has an implied first year net operating income yield of c.8.7%1 before the impact of management charges which would rise to c.12% if the SMS stores achieve 80% occupancy at today's rental rate levels.
The SMS business, which had pro forma gross assets3 of £45.6m at 30 April 2015, will be acquired on a debt free basis with the total consideration (comprising the initial consideration and, if applicable, the deferred consideration) expected to be c.£44.4m. The acquisition will be funded from the Group's existing debt facilities, with £45m of the Group's £60m accordion facility converted into a committed revolving credit facility. On a pro forma basis, the Group's Loan to Value ratio post completion of this acquisition would be c.36% compared to 32% at 31 October 2015.
The acquisition is expected to be immediately accretive to Group earnings per share from completion and will support the Group's future dividend capacity.
The call option can be exercised by Safestore at any time during the next two years and, similarly, the put option can be exercised by the Vendors at any time over the same two year period, conditional upon the conclusion of certain property related matters which are expected to be finalised in the next twelve months. A further announcement will be made following exercise of the call option by Safestore or the put option by the Vendors.
Ends
1 - Based on forecast EBITDA before the impact of management charges for the year ended 30 April 2016 and including the impact of estimated cash to be acquired with the business.
2 - Includes the openings of new stores in Chiswick, Birmingham and Wandsworth later this year.
3 - Includes the impact of a property valuation subsequently performed but which was not reflected in the April 2015 UK GAAP statutory accounts, but excludes interests in leasehold properties estimated at c.£10m, which would be offset in the balance sheet by an equal and opposite finance lease liability. UK GAAP gross assets at April 2015, before adjustment, were £17.1m.
Enquiries
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Safestore Holdings plc |
020 8732 1500 |
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Frederic Vecchioli, Chief Executive Officer |
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Andy Jones, Chief Financial Officer |
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Instinctif Partners |
020 7457 2020 |
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Mark Reed Guy Scarborough |
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Notes to editors:
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Safestore is the UK's largest self-storage group with 119 stores, comprising 95 wholly owned stores in the UK (including 56 in London and the South East with the remainder in key metropolitan areas such as Manchester, Birmingham, Glasgow, Edinburgh, Liverpool and Bristol) and 24 wholly owned stores in the Paris region. In addition, Safestore has 12 Space Maker stores under management in the UK.
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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 49,000 personal and business customers.
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Safestore (excluding Space Maker) has a maximum lettable area ("MLA") of 4.925 million sq ft (excluding the expansion pipeline stores) of which 3.435 million sq ft was occupied at 31 January 2016.
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Safestore employs around 525 people in the UK and France.
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This information is provided by RNS
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