TIDMSAFE

RNS Number : 5828S

Safestore Holdings plc

17 November 2021

17 November 2021

Safestore Holdings plc

Fourth quarter trading update for the period 1 August 2021 to 31 October 2021

Excellent final quarter with accelerating growth completes a record breaking year

 
 Group Operating Performance        Q4 2021   Q4 2020    Change    Change- 
                                                (3)                 CER (2) 
---------------------------------  --------  --------  ---------  --------- 
 Revenue (GBP'm)                     51.1      42.8      19.4%      21.0% 
 Revenue (GBP'm)- year-to-date 
  (YTD)                              186.8     162.3     15.1%      15.5% 
 Closing Occupancy (let sq ft- 
  million)(5)                        5.883     5.454      7.9%       n/a 
 Closing Occupancy (% of MLA)(6)     84.5%     79.5%    +5.0ppts     n/a 
 Average Storage Rate (GBP)          28.42     26.21      8.4%      10.1% 
 Average Storage Rate (GBP)- 
  YTD                                26.95     26.44      1.9%       2.3% 
 
 
 Group Operating Performance-       Q4 2021   Q4 2020    Change    Change- 
  like-for-like(4)                              (3)                 CER (2) 
---------------------------------  --------  --------  ---------  --------- 
 Storage Revenue (GBP'm)             40.7      34.1      19.4%      21.1% 
 Ancillary Revenues (GBP'm)           8.2       7.3      12.3%      12.3% 
 Revenue (GBP'm)                     48.9      41.4      18.1%      19.6% 
 Storage Revenue (GBP'm)- YTD        148.1     129.9     14.0%      14.4% 
 Ancillary Revenues (GBP'm)- 
  YTD                                30.6      27.7      10.5%      10.8% 
 Revenue (GBP'm)- YTD                178.7     157.6     13.4%      13.8% 
 Closing Occupancy (let sq ft- 
  million)(5)                        5.598     5.249      6.6%       n/a 
 Closing Occupancy (% of MLA)(6)     85.1%     80.1%    +5.0ppts     n/a 
 Average Occupancy (let sq ft- 
  million)                           5.644     5.170      9.2%       n/a 
 Average Occupancy- YTD (let 
  sq ft- million)                    5.474     4.897     11.8%       n/a 
 Average Storage Rate (GBP)          28.61     26.20      9.2%      10.8% 
 Average Storage Rate (GBP)- 
  YTD                                27.06     26.51      2.1%       2.4% 
 

Highlights

-- Strong momentum in final quarter with Group revenue up 21.0% and for the full year up 15.5% in CER(1)

   --      Like-for-like(3) Group revenue for the year in CER(1) up 13.8% 

o UK up 16.8%

o Paris up 4.3%

-- Strong occupancy performance with Group like-for-like closing occupancy of 85.1% (up 5.0ppts on Q4 2020).

   --      Group like-for-like average occupancy for the year up 9.2% 

-- Group like-for-like average storage rate for final quarter up 10.8% and up 2.4% in CER(1) for the year

-- New freehold development site acquired at London- Old Kent Road which will add 76,500sq ft of MLA

-- Planning permissions granted for previously announced 48,000 sq ft MLA Northern Madrid and 30,000 sq ft MLA Southern Barcelona sites

   --      Planning permission granted for extension of Winchester store adding 11,000 sq ft of MLA 
   --      Property Pipeline now at 800,000 sq ft of MLA 

-- Full year earnings to 31 October 2021 anticipated to be slightly ahead of previous guidance of 39.5p to 40p of Adjusted Diluted EPRA Earnings per Share (7)

Frederic Vecchioli, Chief Executive Officer commented:

"I am pleased to report a strong final quarter to conclude what was an exceptional and record result for the year. I would like to thank our staff for continuing to perform excellently throughout the period particularly given the challenges presented by COVID-19.

"All geographies have performed strongly and have shown good momentum in the final quarter. The UK business has traded particularly well this quarter, with closing occupancy up by 6.0 ppts at 85.4% and exceptionally strong growth in average rate in the final three months driving like-for-like revenue growth of 16.8% for the year. Our Paris business saw pleasing average rate improvement in the final quarter and, combined with 4.8 ppts of like-for-like occupancy growth for the year (to 83.6%), grew like-for-like revenue by 4.3%. Our Spanish business, in its first full year of ownership, also performed ahead of our expectations.

"Our property pipeline continues to grow and we now have 800,000 sq ft planned to open over the coming years in the UK, Paris and Spain, representing growth of 11% in the size of our estate. In November 2021, we added a further freehold London site to our pipeline in the Old Kent Road area. Our pipeline will be financed by our free cashflow and existing debt facilities and we anticipate further additions over the coming months.

"The Company has weathered the pandemic well and continues to be in a very strong position. Despite the current high levels of occupancy, the business still has 1.1m square feet of currently unlet space in its existing fully invested estate in addition to 0.8m square feet in its pipeline. This represents a significant organic growth opportunity in what remains a fragmented and growing market. Our leading market positions in the UK and Paris, combined with our balance sheet strength and resilient business model, leave us well positioned for the future . The Company anticipates that earnings for the full year will be slightly ahead of previous guidance of 39.5 to 40p of Adjusted Diluted EPRA earnings per share."

Safestore will announce its results for the year ended 31 October 2021 on Thursday, 13 January 2022.

Business highlights

UK Trading Performance

 
 UK Operating Performance           Q4 2021   Q4 2020    Change 
                                                (3) 
---------------------------------  --------  --------  --------- 
 Revenue (GBP'm)                     40.0      31.9      25.4% 
 Revenue (GBP'm)- YTD                144.1     121.3     18.8% 
 Closing Occupancy (let sq ft- 
  million)(5)                        4.690     4.325      8.4% 
 Closing Occupancy (% of MLA)(6)     85.4%     79.4%    +6.0ppts 
 Average Storage Rate (GBP)          27.12     23.81     13.9% 
 Average Storage Rate (GBP)- 
  YTD                                25.32     24.37      3.9% 
 
 
 UK Operating Performance- like-for-like(4)    Q4 2021   Q4 2020    Change 
                                                           (3) 
--------------------------------------------  --------  --------  --------- 
 Storage Revenue (GBP'm)                        31.2      24.7      26.3% 
 Ancillary Revenue (GBP'm)                       7.3       6.5      12.3% 
 Revenue (GBP'm)                                38.5      31.2      23.4% 
 Storage Revenue (GBP'm)- YTD                   111.7     94.4      18.3% 
 Ancillary Revenue (GBP'm)- YTD                 27.1      24.4      11.1% 
 Revenue (GBP'm)- YTD                           138.8     118.8     16.8% 
 Closing Occupancy (let sq ft- 
  million)(5)                                   4.501     4.215      6.8% 
 Closing Occupancy (% of MLA)(6)                85.4%     80.4%    +5.0ppts 
 Average Occupancy (let sq ft- 
  million)                                      4.535     4.137      9.6% 
 Average Occupancy- YTD (let 
  sq ft- million)                               4.397     3.882     13.3% 
 Average Storage Rate (GBP)                     27.32     23.79     14.8% 
 Average Storage Rate (GBP)- 
  YTD                                           25.41     24.32      4.5% 
 

The UK's fourth quarter performance was exceptional with the business growing total revenue by 25.4% and like-for-like revenue by 23.4%. Momentum was strong in the quarter with like-for-like storage rates up 14.8% compared to the prior year as a result of the cumulative effect of pricing actions taken throughout the year as well as reduced discounting. In addition, average occupancy was up 9.6% in the quarter.

In a reversion to more normal cyclical trading patterns, the business saw a like-for-like occupancy outflow of 96,000 sq ft in the quarter. In the prior year, reflecting a trading rebound after the COVID-19 lockdowns of Q2 and Q3, the business added 245,000 sq ft of occupancy on a like-for-like basis. Over the year the business added occupancy of 286,000 sq ft on a like-for-like basis (2020: 289,000 sq ft). As a result, Q4 like-for-like closing occupancy, at 85.4%, increased by 5.0ppts compared to the prior year.

The strong Q4 average storage rate performance resulted in the like-for-like average rate for the year increasing by 4.5% compared to Q4 2020.

Total revenue grew by 18.8% for the full year. This reflected like-for-like growth of 16.8%, 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.

Paris Trading Performance

 
 Paris Operating Performance         Q4 2021   Q4 2020    Change 
                                                 (3) 
----------------------------------  --------  --------  --------- 
 Revenue (EUR'm)                      12.2      11.3       8.0% 
 Revenue (EUR'm)- full year           46.0      44.1       4.3% 
 Closing Occupancy (let sq ft- 
  million)(4)                         1.100     1.034      6.4% 
 Closing Occupancy (% of MLA)(5)      80.7%     78.8%    +1.9ppts 
 Average Storage Rate (EUR)           39.76     39.58      0.5% 
 Average Storage Rate (EUR)- full 
  year                                38.90     39.64     -1.9% 
 Revenue (GBP'm)                      10.4      10.2       2.0% 
 Revenue (GBP'm)- full year           39.9      38.8       2.8% 
 
 
 Paris Operating Performance-        Q4 2021   Q4 2020    Change 
  like-for-like(4)                               (3) 
----------------------------------  --------  --------  --------- 
 Storage Revenue (EUR'm)              11.12     10.27      8.3% 
 Ancillary Revenues (EUR'm)           1.05      0.99       6.1% 
 Revenue (EUR'm)                      12.17     11.26      8.1% 
 Storage Revenue (EUR'm)- full 
  year                                41.90     40.23      4.2% 
 Ancillary Revenues (EUR'm)- full 
  year                                4.04      3.82       5.8% 
 Revenue (EUR'm)- full year           45.94     44.05      4.3% 
 Closing Occupancy (let sq ft- 
  million)(4)                         1.097     1.034      6.1% 
 Closing Occupancy (% of MLA)(5)      83.6%     78.8%    +4.8ppts 
 Average Occupancy (let sq ft- 
  million)                            1.109     1.033      7.4% 
 Average Occupancy- full year 
  (let sq ft-million)                 1.077     1.015      6.1% 
 Average Storage Rate (EUR)           39.76     39.58      0.5% 
 Average Storage Rate (EUR)- full 
  year                                38.90     39.64     -1.9% 
 Revenue (GBP'm)                      10.4      10.2       2.0% 
 Revenue (GBP'm)- full year           39.9      38.8       2.8% 
 

Paris had another good quarter growing revenue by 8.0% compared to last year.

On a like-for-like basis, the business grew storage revenue by 8.3% for the quarter and by 4.2% for the full year. This was driven by average occupancy growth of 6.1% for the year with an average rate movement of -1.9%. Average rate has been improving over the period and was up 0.5% for the quarter.

Paris saw a return to more normal cyclical trading patterns. Like-for-like occupancy reduced by 14,000 sq ft for the quarter (2020: increase of 4,000 sq ft) resulting in like-for-like closing occupancy of 83.6%, up 4.8ppts compared to the prior year . Over the year, occupancy in Paris grew by 63,000 sq ft (2020: increase of 19,000 sq ft).

The Sterling-Euro exchange rate for the year was 1.1516, 1.4% stronger than the prior year (2020: 1.1356). As a result, there was a small foreign exchange impact on the translation of Paris revenues which were up 2.8% for the year in Sterling.

Spain Trading Performance

Our Spanish business, which was acquired in December 2019 and is, therefore, not considered like-for-like, grew revenue by 12.5% in the quarter to EUR0.9m. Revenue for the year was EUR3.3m (2020: EUR2.6m for ten months). Closing occupancy in sq ft was down 2.1% compared to Q4 2020 whilst average rate in the year-to-date grew by 6.4% to EUR32.25 (2020: EUR30.32) with ancillary revenues improving strongly. Closing occupancy was 86.0% (2020: 90.0%).

Property Pipeline

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

New development site- London Old Kent Road

In November 2021, the Group completed the acquisition of a 1.2 acre freehold site off the Old Kent Road in the London Borough of Southwark in South East London. Subject to planning, we hope to open a c. 76,500 sq ft MLA store in due course. Existing tenants on the site will provide a rental income in the meantime.

Store Extension- Winchester

In September 2021 the Group received planning permission to extend its Winchester store by 11,000 sq ft. The existing store has an MLA of 42,000 sq ft and has been more than 90% occupied for the last twelve months. It is anticipated that the extension will be open in the fourth calendar quarter of 2022 and that there will be minimal impact on day-to-day operations of the store during construction.

Completion of Acquisition- Lea Bridge

In April 2021, the Group exchanged contracts on a freehold 1.3 acre site at Lea Bridge in North East London. The acquisition of the site has now been completed and we plan to 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 GBP170k per annum is currently received on this site.

Planning permissions- Spain

Our Northern Madrid (48,000 sq ft of MLA) and our Southern Barcelona (30,000 sq ft MLA) stores announced previously, were granted planning permission in the period and are expected to open in the third and fourth quarters of 2022 respectively.

The Group now has a property pipeline of 800,000 sq ft of MLA with a total remaining capital expenditure requirement of c. GBP95m over the next four years, which the Group intends to self-finance through free cash-flow and the Group's existing debt facilities. 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

 
 Store                    FH/   Status                    MLA SQFT    Target     Other 
                           LH                                          Opening 
 London- Bow              FH    Completed/ construction   74,000      Q1 2022    Conversion of 
                                 underway                                         existing building 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 London- Lea Bridge       FH    Completed/ Subject        76,500      Q1 2025    New build. 
                                 to Planning                                      GBP170k pa of 
                                                                                  rental income 
                                                                                  prior to opening. 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 London- Old Kent         FH    Completed/ Subject        76,500      TBC        New build. 
  Road                           to Planning                                      Rental Income 
                                                                                  receivable prior 
                                                                                  to opening. 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 London- Woodford         FH    Contracts exchanged/      65,000      Q4 2025    New build. 
                                 subject to planning 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 London- Morden           FH    Completed/ Planning       52,000      Q1 2023    New build. 
                                 granted 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 London- Bermondsey       FH    Completed/ Subject        50,000      Q4 2026    New build. 
                                 to Planning 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 Shoreham                 FH    Contracts exchanged/      54,000      Q4 2022    New build 
                                 subject to planning 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 London- Paddington       LH    Completed/ Planning       13,000      Q2 2023    Conversion of 
  Park West                      granted                                          Basement Car Park- 
                                                                                  Satellite store 
                                                                                  to existing Paddington 
                                                                                  store 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 London- Paddington       LH    Completed/ construction   8,500       Q1 2022    Extension of existing 
  Marble Arch                    underway                                         site via conversion 
                                                                                  of adjacent basement 
                                                                                  car park 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 London- Wimbledon        FH    Contracts exchanged/      9,000       Q2 2022    Extension of existing 
                                 planning granted          storage                site 
                                                           1,000 
                                                           office 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 Southend                 FH    Completion of             10,100      Q4 2021    Extension of existing 
                                 build imminent                                   site 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 London- Edgware          FH    Completion of             22,900      Q4 2021    Extension of existing 
                                 build imminent                                   site 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 Winchester               FH    Planning granted          11,000      Q4 2022    Extension of existing 
                                                                                  site 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 Paris- La Défense   FH    Completed/ Subject        44,000      Q2 2025    Facility within 
                                 to Planning                                      mixed use development 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 Paris- Southern          FH    Contracts exchanged/      55,000      Q3 2022    New build 
  Paris                          subject to Planning 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 Northern Madrid          FH    Completed/ Planning       48,000      Q3 2022    Conversion of 
                                 granted                                          existing building 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 Southern Madrid          FH    Completed/ Planning       29,000      Q3 2022    Conversion of 
                                 granted                                          existing building 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 Central Barcelona        FH    Completed/ Planning       13,500      Q1 2022    Conversion of 
  1                              granted                                          existing building 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 Central Barcelona        LH    Contracts exchanged/      19,000      Q2 2022    Conversion of 
  2                              subject to Planning                              existing building 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 Northern Barcelona       FH    Contracts exchanged/      36,300      Q3 2022    Conversion of 
                                 subject to Planning                              existing building 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 South Barcelona          FH    Contracts exchanged/      30,000      Q4 2022    Conversion of 
                                 planning granted                                 existing building 
                         ----  ------------------------  ----------  ---------  ------------------------ 
 Total Pipeline MLA                                       c 800k 
                                                         ----------  ----------------------------------- 
 Total Further Capex                                      c. GBP95m 
                                                         ----------  ----------------------------------- 
 

Ends

Notes

1 - Where reported numbers are presented either to the nearest GBP01.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 - Q4 2020 is the quarter ended 31 October 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 October 2021 (31 October 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

 
 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, Bryn Woodward 
 

Notes to editors:

-- Safestore is the UK's largest self-storage group with 161 stores at 31 October 2021, comprising 128 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), 29 wholly owned stores in the Paris region and four stores in Barcelona. In addition, the Group operates eight stores in the Netherlands and six stores in Belgium under a joint venture agreement with Carlyle.

-- 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 80,000   personal and business customers. 

-- As at 31 October 2021, Safestore had a maximum lettable area ("ML A") of 6.960 million sq ft (excluding the expansion pipeline stores, and the Carlyle Joint Venture) of which 5.883 million sq ft was occupied.

   --      Safestore employs around 700   people in the UK, Paris and Barcelona. 

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