TIDMSAFE
RNS Number : 0403M
Safestore Holdings plc
12 September 2019
Safestore Holdings plc
Third quarter trading update for the period 1 May 2019 to 31
July 2019
Good operational and financial performance, further strategic
progress
Group Operating Performance Q3 2019 Q3 2018(2) Change Change-
CER(1)
--------------------------------- -------- ----------- --------- --------
Revenue (GBP'm) 38.2 36.4 4.9% 4.8%
Revenue (GBP'm)- year-to-date 111.3 105.6 5.4% 5.5%
Closing Occupancy (let sq ft-
million)(4) 4.94 4.77 3.6% n/a
Closing Occupancy (% of MLA)(5) 77.5% 75.8% +1.7ppts n/a
Average Storage Rate (GBP) 25.66 25.32 1.3% 1.2%
Average Storage Rate (GBP)-
year-to-date 26.08 25.71 1.4% 1.6%
Group Operating Performance- Q3 2019 Q3 2018(2) Change Change-
like-for-like(3) CER(1)
--------------------------------- -------- ----------- --------- --------
Revenue (GBP'm) 37.7 36.1 4.4% 4.2%
Revenue (GBP'm)- year-to-date 109.8 104.3 5.3% 5.4%
Closing Occupancy (let sq ft-
million)(4) 4.87 4.74 2.7% n/a
Closing Occupancy (% of MLA)(5) 78.6% 76.5% +2.1ppts n/a
Average Storage Rate (GBP) 25.61 25.21 1.6% 1.4%
Average Storage Rate (GBP)-
year-to-date 26.01 25.58 1.7% 1.8%
Highlights
-- Group revenue in Q3 in CER(1) grew by 4.8%
-- Group like-for-like(3) revenue in Q3 in CER(1) increased 4.2%
with good performance in both geographies
o UK up 4.0%
o Paris up 6.1%
-- Group like-for-like closing occupancy of 78.6% (up 2.1ppts on Q3 2018)
-- Group like-for-like average storage rate in Q3 in CER(1) grew 1.4%
-- New long leasehold site secured at Gateshead in North East of England
-- Joint venture with Carlyle completes acquisition of M3 Self Storage in Netherlands
-- Heathrow store acquisition completed
Frederic Vecchioli, Chief Executive Officer commented:
"I am pleased to report another good performance in the third
quarter despite annualising a strong third quarter in 2018. Our top
priority remains the significant organic growth opportunity
represented by the 1.4m square feet of unlet space in our existing
fully invested estate.
"Our recent openings in London (Paddington Marble Arch and
Mitcham) and Paris (Pontoise), are performing in line with or
better than their business plans. I am also excited by our entry
into the Dutch market with the formation of our joint venture with
Carlyle and the subsequent acquisition of M3 Self Storage, as well
as our new sites at London Heathrow and Gateshead.
"I am confident that our leading market positions in the UK and
Paris and our resilient business model leave us well positioned.
The Company has started the fourth quarter well and remains on
course to meet the Board's full year expectations."
Business highlights
UK Trading Performance
UK Operating Performance Q3 2019 Q3 2018(2) Change
--------------------------------- -------- ----------- ---------
Revenue (GBP'm) 28.8 27.6 4.3%
Revenue (GBP'm)- year-to-date 84.0 80.0 5.0%
Closing Occupancy (let sq ft-
million)(4) 3.93 3.83 2.6%
Closing Occupancy (% of MLA)(5) 76.7% 74.7% +2.0ppts
Average Storage Rate (GBP) 23.45 23.15 1.3%
Average Storage Rate (GBP)-
year-to-date 23.97 23.49 2.0%
UK Operating Performance- like-for-like(3) Q3 2019 Q3 2018(2) Change
-------------------------------------------- -------- ----------- ---------
Revenue (GBP'm) 28.4 27.3 4.0%
Revenue (GBP'm)- year-to-date 82.8 78.8 5.1%
Closing Occupancy (let sq ft-
million)(4) 3.88 3.80 2.1%
Closing Occupancy (% of MLA)(5) 77.1% 75.6% +1.5ppts
Average Storage Rate (GBP) 23.33 22.98 1.5%
Average Storage Rate (GBP)-
year-to-date 23.83 23.31 2.2%
The UK business grew revenue by 4.3% in the quarter with
like-for-like revenue also growing by 4.0%. Performance was good
across the UK with London and the South East up 2.6% and regional
UK up 6.1%.
The third quarter is traditionally the busiest period of the
Group's financial year. The UK business built on the strong third
quarter of 2018 and achieved a record number of like-for-like new
lets in the period and added 260,000 sq ft of like-for-like
occupancy since the end of Q2 (2018: 230,000 sq ft added). As a
result, Q3 like-for-like closing occupancy, at 77.1%, increased by
1.5 percentage points compared to the prior year and by 4.5
percentage points compared to the position at the end of Q2.
Like-for-like average storage rate in the UK was up 1.5%
compared to Q3 2018 and is up 2.2% for the year-to-date.
In 2018 we opened new stores at London- Paddington Marble Arch
and London- Mitcham which are not included in the like-for-like
figures. Both stores are performing in line with or ahead of their
business plans.
Paris Trading Performance
Paris Operating Performance Q3 2019 Q3 2018(2) Change
--------------------------------- -------- ----------- ---------
Revenue (EUR'm) 10.6 9.9 7.1%
Revenue (EUR'm)- year-to-date 31.1 28.9 7.6%
Closing Occupancy (let sq ft-
million)(4) 1.01 0.94 7.4%
Closing Occupancy (% of MLA)(5) 80.7% 80.5% +0.2ppts
Average Storage Rate (EUR) 38.58 38.69 -0.3%
Average Storage Rate (EUR)-
year-to-date 38.87 39.28 -1.0%
Revenue (GBP'm) 9.4 8.8 6.8%
Revenue (GBP'm)- year-to-date 27.3 25.6 6.6%
Paris Operating Performance- Q3 2019 Q3 2018(2) Change
like-for-like(3)
--------------------------------- -------- ----------- ---------
Revenue (EUR'm) 10.5 9.9 6.1%
Revenue (EUR'm)- year-to-date 30.7 28.9 6.2%
Closing Occupancy (let sq ft-
million)(4) 0.99 0.94 5.3%
Closing Occupancy (% of MLA)(5) 84.7% 80.5% +4.2ppts
Average Storage Rate (EUR) 38.88 38.69 0.5%
Average Storage Rate (EUR)-
year-to-date 39.12 39.28 -0.4%
Paris had a strong quarter, growing revenue by 7.1% compared to
last year.
On a like-for-like basis the business grew revenue by 6.1% for
the quarter driven by an occupancy increase of 5.3% compared to Q3
2018.
Like-for-like occupancy grew by 34,000 sq ft since the end of Q2
(2018: 41,000 sq ft) resulting in closing occupancy of 84.7%, up
4.2 percentage points compared to the prior year and by 3.0
percentage points over the peak season as compared to the position
at the end of Q2.
Like-for-like average rate in Paris was up 0.5% in the quarter
showing improving momentum. Typically, rates in our suburban stores
are significantly lower than in our central Paris stores. Excluding
our lower price suburban Emerainville and Combs-la-Ville stores,
which opened in September 2016 and June 2017 respectively, from the
like-for-like portfolio, average rate was up 1.9% throughout the
period.
Our new 65,000 sq ft freehold store at Pontoise, in the west of
Paris, opened as planned after the period end in August 2019.
As with the addition of all new stores to our estate, the impact
of the new stores opened in August 2018 at Poissy and in August
2019 at Pontoise is to dilute total average rate and occupancy in
the initial period after trading commences. Both stores are trading
ahead of our business plan.
The impact of the small Sterling fluctuations compared to Q3
2018 contributed to the total Sterling equivalent revenue
increasing 6.8% on the prior year.
Joint Venture with Carlyle and Acquisition of M3
As announced on 19 August 2019, Safestore has invested in a 20%
stake in a joint venture with Carlyle to invest in carefully
selected self-storage opportunities in Europe. Safestore has
developed a highly scalable platform in self-storage built on
leading marketing and operational expertise. This platform is
proven to work across geographies and Safestore sees an opportunity
to leverage the platform in regions outside of its existing
footprint in the UK and Paris.
Safestore's initial equity investment in the joint venture was
EUR5.2m. Safestore will also earn a fee for providing management
services to the joint venture. The Group expects to earn an initial
return on investment(6) of 8% before transaction related costs for
the first full year reflecting its share of expected JV profits and
fees for management services
M3, which has assets with an unaudited proforma book value of
EUR21.5m at the date of completion, has six prime locations in
Amsterdam and Haarlem with one of the sites currently under
construction. The three stores in Haarlem are all freehold whilst
two of the Amsterdam stores are subject to perpetual Ground Leases.
The third Amsterdam store is a leasehold store with nine years
remaining on the lease. The construction of the sixth store has now
been finalised and completion of the acquisition of M3 took place
on 31 August 2019. The business has 25,700 sq metres (277,000 sq
ft) of MLA and an occupancy of 68%.
The Dutch self-storage market is the fourth largest in Europe
with 303 stores and 9.6m sq ft of MLA. This represents 0.56 sq ft
per head of population which compares to 0.68 sq ft per head in the
UK, 0.19 sq ft per head in France and 9.4 sq ft per head in the
USA.
The Group's investment in the JV is expected to be immediately
accretive to Group earnings per share from completion and will
support the Group's future dividend capacity.
New Store - Gateshead
In August 2019 we acquired a long leasehold 1.6 acre site with
an existing building in Gateshead, North East England. The lease
has 130 years remaining. Subject to planning permission we plan to
convert the building into a 40,000 sq ft store and anticipate
opening the store in Summer 2020.
Acquisition of Heathrow store
In addition (also as announced on 19 August 2019), Safestore has
acquired Salus Services Ltd, the owner of a 34,000 sq ft MLA
freehold store from Rockpool Investments for GBP6.5m in cash,
funded from the Group's existing resources. 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.
The store, which opened in 2015, is currently trading at an
occupancy of 86%. The Group anticipates that the first year initial
yield will be c. 5.5%.
The Group will rebrand the store and has taken over operation of
the site with immediate effect.
Outlook
Reflecting normal industry trading patterns, we anticipate a
reduction in occupancy in Q4 compared to Q3 although the fourth
quarter has started solidly. The Company is in a strong position
and on course to meet the Board's full year expectations.
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 - Q3 2018 is the quarter ended 31 July 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 July 2019 (31 July 2018 - 27,250 sq
ft).
5 - MLA is Maximum Lettable Area.
6 - For these purposes Return on Investment is defined as
Safestore's share of the underlying profit after tax (before
exceptional items, transaction related costs, property valuation
movements and derivative movements) of the JV plus the management
fees earned divided by the equity investment in the JV
Enquiries
Safestore Holdings plc 020 8732 1500
Frederic Vecchioli, Chief Executive Officer
Andy Jones, Chief Financial Officer
www.safestore.com
Instinctif Partners 020 7457 2020
Guy Scarborough
Notes to editors:
* Safestore is the UK's largest self-storage group with
146 stores at 31 July 2019, comprising 119 wholly
owned stores in the UK (including 67 in London and
the South East with the remainder in key metropolitan
areas such as Manchester, Birmingham, Glasgow,
Edinburgh, Liverpool and Bristol) and 27 wholly owned
stores in the Paris region. In August 2019, Safestore
announced the formation of a Joint Venture with
Carlyle which has invested in six stores in the
Netherlands.
* 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.
* 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 64,000 personal
and business customers.
* As at 31 July 2019, Safestore had a maximum lettable
area ("MLA") of 6.37 million sq ft (excluding the
expansion pipeline stores, Heathrow and the
Netherlands Joint Venture) of which 4.94 million sq
ft was occupied.
* Safestore employs around 650 people in the UK and
France.
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END
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