Trading, Property Pipeline and Financing Update
10 May 2021
Safestore Holdings plc
Trading, Property Pipeline and Financing Update
Accelerating trading momentum and growing property pipeline.
Upgrade to full year earnings guidance.
|
Group Operating Performance |
Q2 2021 |
Q2 2020 3 |
Change |
Change- CER 2 |
|
Revenue (£'m) |
43.7 |
39.4 |
10.9% |
11.2% |
|
Revenue (£'m)- year-to-date (YTD) |
88.1 |
79.3 |
11.1% |
10.5% |
|
Closing Occupancy (let sq ft- million)5 |
5.635 |
4.824 |
16.8% |
n/a |
|
Closing Occupancy (% of MLA)6 |
80.7% |
71.1% |
+9.6ppts |
n/a |
|
Average Storage Rate (£) |
26.56 |
27.00 |
(1.6%) |
(1.5%) |
|
Average Storage Rate (£)- YTD |
26.51 |
26.52 |
(0.0%) |
(0.7%) |
|
Group Operating Performance- like-for-like4 |
Q2 2021 |
Q2 2020 3 |
Change |
Change- CER 2 |
|
Storage Revenue (£'m) |
34.7 |
31.4 |
10.5% |
10.5% |
|
Ancillary Revenues (£'m) |
7.2 |
6.7 |
7.5% |
7.5% |
|
Revenue (£'m) |
41.9 |
38.1 |
10.0% |
9.9% |
|
Storage Revenue (£'m)- YTD |
69.9 |
63.6 |
9.9% |
9.1% |
|
Ancillary Revenues (£'m)- YTD |
14.4 |
13.8 |
4.3% |
4.3% |
|
Revenue (£'m)- YTD |
84.3 |
77.4 |
8.9% |
8.3% |
|
Closing Occupancy (let sq ft- million)5 |
5.394 |
4.664 |
15.7% |
n/a |
|
Closing Occupancy (% of MLA)6 |
82.3% |
71.5% |
+10.8ppts |
n/a |
|
Average Occupancy (let sq ft- million) |
5.349 |
4.739 |
12.9% |
n/a |
|
Average Occupancy- YTD (let sq ft- million) |
5.307 |
4.795 |
10.7% |
n/a |
|
Average Storage Rate (£) |
26.63 |
26.98 |
(1.3%) |
(1.2%) |
|
Average Storage Rate (£)- YTD |
26.55 |
26.68 |
(0.5%) |
(1.0%) |
Highlights
·Group revenue for the quarter in CER2 up 11.2%
·Group like-for-like4 storage revenue in Q2 in CER2 up 10.5% and like-for-like total revenue up 9.9%.
·Like-for-like4 occupancy up 10.8ppts at 82.3% (2020: 71.5%)
o UK up 11.8ppts at 82.4% (2020: 70.6%)
o Paris up 6.6ppts at 81.7% (2020 75.1%)
·Contracts exchanged for two new development sites and two store extensions in London as well as four new development sites in Spain in Madrid and Barcelona which will together add c. 280,000 sq ft of MLA
·£150m of new competitively priced US Private Placement financing secured with a further uncommitted Shelf debt facility of c. £80m equivalent
· COVID 19- stores operating normally with full observation of social distancing rules and protective personal equipment provided to employees
·Full year earnings guidance revised upwards. Adjusted Diluted EPRA Earnings per Share7 expected to be in the range of 37p to 38p.
Frederic Vecchioli, Chief Executive Officer commented:
"Firstly, I would like to thank our staff for continuing to perform excellently in what has been a challenging environment, with varying degrees of COVID-19 lockdown restrictions in place in all of our geographies during the period. Despite this, I am pleased to report that the strong trading momentum reported for our first quarter has accelerated in the second quarter of the year driven by the strength of our UK performance combined with continued robust results from our French and Spanish businesses. The Group closing occupancy at 30 April 2021 was 5.635m sq ft (up 16.8% on 2020) or 80.7% (up 9.6ppts on 2020), while rate was broadly flat. Our JV with Carlyle, operating in Belgium and the Netherlands, continues to perform in line with its business plan.
"Our Birmingham Middleway and Paris Magenta stores opened successfully in recent weeks and our pipeline of new stores grew significantly with contracts exchanged on four London stores or extensions and four Spanish sites which together add c. 280,000 sq ft of MLA.
"In addition, our financing capacity has been extended with the issuance of a further £150m equivalent of new 7, 10 and 12 year US Private Placement Notes which, in addition to a c.£80m shelf debt facility, provides us with further flexibility to target selected development and acquisition opportunities as they arise.
"We continue to focus on the significant upside from filling the 1.3m square feet of fully invested currently unlet space in our UK, Paris and Spain markets. Whilst the potential for disruption arising from current COVID-19 crisis has not entirely abated, the inherent resilience of our business model as well as our recent and current trading allows me to look forward with optimism.
"The improving momentum in our second quarter performance gives me further confidence in relation to the outlook for the full year and I now anticipate that the business should deliver Adjusted Diluted EPRA Earnings per Share 7 for 2020/21 in a range of 37p to 38p, which would represent an increase of 23% to 26% compared to the prior year."
Business highlights
UK Trading Performance
|
UK Operating Performance |
Q2 2021 |
Q2 2020 3 |
Change |
|
Revenue (£'m) |
33.6 |
29.5 |
13.9% |
|
Revenue (£'m)- YTD |
67.2 |
59.8 |
12.4% |
|
Closing Occupancy (let sq ft- million)5 |
4.466 |
3.745 |
19.3% |
|
Closing Occupancy (% of MLA)6 |
81.0% |
69.8% |
+11.2ppts |
|
Average Storage Rate (£) |
24.96 |
24.99 |
(0.1%) |
|
Average Storage Rate (£)- YTD |
24.66 |
24.72 |
(0.2%) |
|
UK Operating Performance- like-for-like4 |
Q2 2021 |
Q2 2020 3 |
Change |
|
Storage Revenue (£'m) |
26.1 |
22.9 |
14.0% |
|
Ancillary Revenue (£'m) |
6.4 |
6.0 |
6.7% |
|
Revenue (£'m) |
32.5 |
28.9 |
12.5% |
|
Storage Revenue (£'m)- YTD |
52.1 |
46.5 |
12.0% |
|
Ancillary Revenue (£'m)- YTD |
12.7 |
12.2 |
4.1% |
|
Revenue (£'m)- YTD |
64.8 |
58.7 |
10.4% |
|
Closing Occupancy (let sq ft- million)5 |
4.322 |
3.679 |
17.5% |
|
Closing Occupancy (% of MLA)6 |
82.4% |
70.6% |
+11.8ppts |
|
Average Occupancy (let sq ft- million) |
4.286 |
3.741 |
14.6% |
|
Average Occupancy- YTD (let sq ft- million) |
4.255 |
3.792 |
12.2% |
|
Average Storage Rate (£) |
25.03 |
24.91 |
0.5% |
|
Average Storage Rate (£)- YTD |
24.69 |
24.66 |
0.1% |
The UK business accelerated strongly in the second quarter with total revenue up 13.9%. Like-for-like storage revenue was up 14.0% whilst the performance of ancillary revenues improved with growth of 6.7% compared to Q1 2020. As a result, total like-for-like revenue was up 12.5% for the quarter. For the year-to-date, like-for-like revenue was up 10.4% compared to 2020.
The strong UK result was driven by an excellent occupancy performance. Like-for-like average occupancy grew by 14.6% compared to Q1 2020 and the like-for-like closing occupancy at the end of April 2021 was up 11.8ppts at 82.4% (2020: 70.6%). The second quarter saw a like-for-like occupancy inflow of 82,000 sq ft compared to an outflow of 118,000 sq ft in Q1 2020, which reflected the impact of the first COVID-19 lockdown in March/ April 2020. Like-for-like average rate was up 0.5% for the quarter and 0.1% for the six-month period.
Total revenue growth of 13.9% 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 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 .
Paris Trading Performance
|
Paris Operating Performance- total and like-for-like4 |
Q2 2021 |
Q2 2020 3 |
Change |
|
Storage Revenue (€'m) |
9.91 |
9.80 |
1.1% |
|
Ancillary Revenue (€'m) |
0.97 |
0.90 |
7.8% |
|
Revenue (€'m) |
10.88 |
10.70 |
1.7% |
|
Storage Revenue (€'m)- YTD |
20.17 |
19.90 |
1.4% |
|
Ancillary Revenue (€'m)- YTD |
1.94 |
1.85 |
4.9% |
|
Revenue (€'m)- YTD |
22.11 |
21.75 |
1.7% |
|
Closing Occupancy (let sq ft- million)5 |
1.072 |
0.985 |
8.8% |
|
Closing Occupancy (% of MLA)6 |
81.7% |
75.1% |
+6.6ppts |
|
Average Occupancy (let sq ft- million) |
1.063 |
0.998 |
6.5% |
|
Average Occupancy- YTD (let sq ft- million) |
1.052 |
1.003 |
4.9% |
|
Average Storage Rate (€) |
38.25 |
39.94 |
(4.2%) |
|
Average Storage Rate (€)- YTD |
38.67 |
39.88 |
(3.0%) |
|
Revenue (£'m) |
9.4 |
9.3 |
1.1% |
|
Revenue (£'m)- YTD |
19.5 |
18.7 |
4.3% |
For the current year to date, it should be noted that all stores in the portfolio are classified as like-for-like. Paris Magenta opened in late April 2021 so had not meaningfully contributed to revenue at the period end.
Paris had a solid quarter, growing revenue by 1.7% compared to last year.
Occupancy performance was strong for the quarter with closing occupancy at 81.7%, up 6.6ppts compared to 2020. The second quarter saw an occupancy inflow of 26,000 sq ft compared to an outflow of 22,000 sq ft in Q1 2020, which reflected the impact of the first COVID-19 lockdown in March/ April 2020.
The average storage rate was down 4.2% for the quarter driven by promotional activity and a shift in the occupancy mix towards bigger units which command a lower price per sq ft. Ancillary revenues were strong, growing by 7.8% in the quarter.
Sterling equivalent revenue was up 1.1% for the quarter reflecting a 0.6% strengthening in the average Sterling: Euro exchange rate. For the year to date sterling revenue was up 4.3% reflecting a 2.3% weakening in the average exchange rate over the 6 months period.
Spain Trading Performance
Our Barcelona business, which was acquired in December 2019, grew total revenue by 11.5% for the quarter to €0.8m. Revenue for the six months was €1.6m. Closing occupancy was up 0.3ppts at 89.4% (2020: 89.1%) whilst average rate for the quarter grew by 6.8% to €32.16 (2020: €30.10) with ancillary revenues improving strongly.
Property Pipeline- UK/ Paris
Store Opening- Birmingham Middleway/ Digbeth
In July 2020, the Group completed the acquisition of a freehold 2.17-acre site including an existing warehouse in Birmingham. The site is well located on the southern side of the inner A4540 ring road and the new store opened in April 2021. Our existing nearby store at Digbeth (MLA 44,500 sq ft) will close shortly with the majority of customers expected to relocate to the Middleway site. In due course, we intend to sell the Digbeth site, which has residential development potential.
Store Opening- Paris Magenta
In April 2018, we agreed a lease on a site at Magenta in central Paris. We are pleased to confirm that the 50,000 sq ft store opened in late April 2021.
New development site- London- Lea Bridge
In April 2021, the Group exchanged contracts on a freehold 1.3 acre site at Lea Bridge in North East London. Subject to contract and planning, we will open a 76,500 sq ft MLA store in 2024 as the leases for existing tenants on the site have up to two years to run. Rental income of approximately £170k per annum is currently received on this site.
New development site- North East London
In April 2021, the Group exchanged contracts on a freehold site in North East London. Subject to contract and planning, we will open a 56,500 sq ft MLA store in 2025.
New store extension- London- Wimbledon
In April 2021, we exchanged contracts on the acquisition of a 0.5 acre site adjacent to our existing Wimbledon store (MLA 58,800). Subject to completion of this transaction, the existing reception area will be 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 will be added. The Wimbledon store's peak occupancy, prior to the COVID pandemic, was 92%.
New store extension- London- Paddington Marble Arch
In May 2021, the Group exchanged contracts on a leasehold basement car park adjacent to our existing Paddington Marble Arch store. Subject to planning, a further 8,500 sq ft of space will be added to our site. The occupancy of the Paddington Marble Arch store at 31 March 2021 was 80%.
In addition, as previously announced, a separate satellite store at Paddington Park West Place, with MLA of 13,000 sq ft will open during 2023.
The total costs of acquisition and construction of the above four new projects is anticipated to be c. £35m.
Property Pipeline Summary- UK
|
Store |
FH/ LH |
Status |
MLA SQFT |
Opening |
Other |
|
London- Lea Bridge |
FH |
Contracts exchanged/ subject to planning |
76,500 |
Q4 2024 |
New build. £170k pa of rental income prior to opening. |
|
London- North East London |
FH |
Contracts exchanged/ subject to planning |
56,500 |
Q4 2025 |
New build. |
|
London- Morden |
FH |
Completed/ Planning granted |
52,000 |
Q4 2022 |
New build. |
|
London- Bermondsey |
FH |
Completed/ Subject to Planning |
50,000 |
Q2 2026 |
New build. |
|
London- Paddington Park West |
LH |
Completed/ Planning granted |
13,000 |
Q2 2023 |
Conversion of Basement Car Park- Satellite store to existing Paddington store |
|
London- Paddington Marble Arch |
LH |
Contracts exchanged/ subject to planning |
8,500 |
Q1 2022 |
Extension of existing site via conversion of adjacent basement car park |
|
London- Wimbledon |
FH |
Contracts exchanged/ subject to planning |
9,000 storage 1,000 office |
Q2 2022 |
Extension of existing site |
|
Southend |
FH |
Completed/ Planning granted |
10,100 |
Q4 2021 |
Extension of existing site |
|
London- Edgware |
FH |
Completed/ Planning granted |
22,900 |
Q4 2021 |
Extension of existing site |
|
Total UK Pipeline MLA |
c. 300k |
|
|||
|
Total Further UK Capex |
c. £53m. |
|
|||
Property Pipeline- Spain
In December 2019 the Group completed the acquisition of OMB Self Storage which operates three leasehold properties and one freehold property, all very well located in the centre of Barcelona. The four locations (Valencia, Calabria, Glories and Marina) have an MLA totalling 108,000 sq ft. The occupancy of the business at the end of April 2021, was 89.4%.
We are pleased to announce the next phase of expansion of the business in Barcelona and its entry into Madrid with the following sites.
New development site- Northern Madrid
In April 2021, the Group exchanged contracts on a freehold building in a high population density area in northern Madrid. Subject to contract and planning, we will convert the existing building into a 48,000 sq ft MLA self-storage facility. It is anticipated that the site will open in the second half of 2022.
New development site- Southern Madrid
In March 2021, the Group exchanged contracts on a freehold building in southern Madrid. Subject to contract and planning, we will convert the existing building into a 29,000 sq ft MLA self-storage facility. It is anticipated that the site will open in the second half of 2022.
New development site- Central Barcelona
In January 2021, the Group exchanged contracts on a freehold building in a densely populated area in central Barcelona. Subject to contract and planning, we will convert the existing building into a 13,500 sq ft MLA self-storage facility. It is anticipated that the site will open in the first half of 2022.
New development site- Northern Barcelona
In April 2021, the Group exchanged contracts on a freehold building in northern Barcelona. Subject to contract and planning, we will convert the existing building into a 36,300 sq ft MLA self-storage facility. It is anticipated that the site will open in the second half of 2022.
The total cost of acquisition and construction of the new Spanish sites is anticipated to be c. €29m and the four stores will add 127,000 sq ft of additional MLA.
Property Pipeline Summary- Spain
|
Store |
FH/ LH |
Status |
MLA SQFT |
Opening |
Other |
|
Northern Madrid |
FH |
Subject to contract and planning |
48,000 |
Q3 2022 |
Conversion of existing building |
|
Southern Madrid |
FH |
Subject to contract and planning |
29,000 |
Q3 2022 |
Conversion of existing building |
|
Central Barcelona |
FH |
Subject to contract and planning |
13,500 |
Q1 2022 |
Conversion of existing building |
|
Northern Barcelona |
FH |
Subject to contract and planning |
36,300 |
Q3 2022 |
Conversion of existing building |
|
Total Spain Pipeline MLA |
c. 127k |
|
|
||
|
Total Further Spain Capex |
€29m |
|
|
||
Financing
On 7 May 2021, Safestore extended its borrowing facilities with the issuance of the equivalent of £150m new sterling and euro denominated US Private Placement (USPP) notes with the following coupons and tenors:
- £20m 7 year notes at a coupon of 1.96% (credit spread of 140 bps)
- €29m 7 year notes a coupon of 0.93% (credit spread of 105 bps)
- £80m 10 year notes a coupon of 2.39% (credit spread of 150 bps)
- €29m 12 year notes a coupon of 1.42% (credit spread of 118 bps)
The funds will be received in June 2021 and August 2021 and will be used initially to pay down Revolving Credit Facilities (RCF) thereby providing further capacity for medium-term growth.
The USPP notes were issued to a group of existing institutional investors.
In addition, an uncommitted €115m Shelf facility, which can be drawn in Euros or Sterling, was agreed with one existing lender, giving the Group further financing flexibility. The facility would be drawn in the form of Private Placement Notes at a coupon to be agreed at the time of funding.
The existing USPP notes and banking arrangements remain unchanged and consist of:
- A £250m revolving credit facility of which £157m is drawn
- A €70m revolving credit facility of which €30m 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%
- €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 average cost of debt of the Group remains broadly unchanged at c. 2.2% and the weighted average tenor of our facilities has increased from 4.0 years to 5.2 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.
Interim Results
The Group will announce its full Interim Results for the six months to 30 April 2021 on 17 June 2021.
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 - Q2 2020 is the quarter ended 30 April 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 30 April 2021 (30 April 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 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
|
Safestore Holdings plc |
020 8732 1500 |
|
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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Guy Scarborough, Bryn Woodward |
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Notes to editors:
|
· Safestore is the UK's largest self-storage group with 160 stores at 30 April 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) and 29 wholly owned stores in the Paris region and 4 stores in Barcelona. In addition, the Group operates nine stores in the Netherlands and six stores in Belgium under a joint venture agreement with Carlyle. |
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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 75,000 personal and business customers. |
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·As at 30 April 2021, Safestore had a maximum lettable area ("MLA") of 6.983 million sq ft (excluding the expansion pipeline stores, and the Carlyle Joint Venture) of which 5.635 million sq ft was occupied. |
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· Safestore employs around 700 people in the UK, Paris and Barcelona. |
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