Fourth quarter trading update

RNS Number : 4167H

Safestore Holdings plc

24 November 2022

 

24 November 2022

Safestore Holdings plc

Fourth quarter trading update for the period 1 August 2022 to 31 October 2022

Solid performance and significant strategic progress complete an excellent year

Group Operating Performance	Q4 2022	Q4 20212	Change	Change- CER1
Revenue (£'m)	56.8	51.1	11.2%	10.8%
Revenue (£'m)- year-to-date (YTD)	212.5	186.8	13.8%	14.3%
Closing Occupancy (let sq ft- million)3	6.317	5.883	7.4%	n/a
Closing Occupancy (% of MLA)	82.1%	84.5%	-2.4ppts	n/a
Maximum Lettable Area (MLA -million)4	7.700	6.960	10.6%	n/a
Average Storage Rate (£)	29.64	28.42	4.3%	3.9%
Average Storage Rate (£)- YTD	29.25	26.95	8.5%	9.2%

Group Operating Performance- like-for-like3	Q4 2022	Q4 20212	Change	Change- CER1
Revenue (£'m)	53.5	50.7	5.5%	5.1%
Revenue (£'m)- year-to-date (YTD)	204.3	185.5	10.1%	10.7%
Closing Occupancy (let sq ft- million)4	5.725	5.838	-1.9%	n/a
Closing Occupancy (% of MLA)5	83.1%	85.2%	-2.1ppts	n/a
Average Occupancy (let sq ft- million)	5.786	5.884	-1.7%	n/a
Average Occupancy (let sq ft- million)- YTD	5.723	5.685	0.7%	n/a
Average Storage Rate (£)	30.84	28.52	8.1%	7.8%
Average Storage Rate (£)- YTD	29.99	27.03	11.0%	11.5%

Highlights

· Group revenue for the quarter in CER¹ up 10.8% and 11.2% at actual exchange rates

· Like-for-like⁵ Group revenue for the quarter in CER¹ up 5.1%

o  UK up 5.8%

o  Paris up 2.5%

o  Spain up 6.8%

· Like-for-like⁵ average rate for the quarter up 7.8% in CER¹

o  UK up 9.2%

o  Paris up 3.3%

o  Spain up 1.9%

· Like-for-like⁵ occupancy at 83.1% (2021: 85.2%)

o  UK down 2.6ppts at 83.0% (2021: 85.6%)

o  Paris down 0.2ppts at 83.4% (2021 83.6%)

o  Spain down 0.1ppts at 85.9% (2021: 86.0%)

·     Revolving Credit Facilities (RCF's) refinanced with a new increased £400m unsecured multi-currency four-year facility (with two one-year extension options). Margins remain at 1.25% in line with previous RCF's and all facilities, including private placement notes, are now unsecured.

·     Eight new sites secured since our last update including three in London, two in Paris, one in Madrid and two in the Netherlands.

·     Group Property Pipeline of 1.4m sq ft representing c. 18% of the existing portfolio.

·     Lease extensions agreed at Sunderland and London- Crayford.

Frederic Vecchioli, Chief Executive Officer, commented:

"I am pleased to report the final quarter of an excellent year in which we delivered significant strategic progress having enhanced our funding capacity and secured eight new development sites. The strong performance for the year is especially pleasing as it follows a record year in 2021. The result was driven by strong revenue growth in the UK market, good performances in our Parisian and Spanish businesses, and seven months' contribution from our Benelux business, which was acquired in March 2022.

Early trading in the new financial year shows solid enquiry and new let growth compared to last year with rates paid by new customers continuing to grow.

Over the last six years, the group has developed or acquired 66 stores and expanded into three new countries (Netherlands, Belgium and Spain). In addition, our development pipeline of 29 new stores represents a further c. 18% of our existing portfolio's MLA.

Our strong and flexible balance sheet has been significantly enhanced by the agreement of a new unsecured four year £400m multi-currency revolving credit facility which increases funding capacity, allowing us to continue to consider strategic, value-accretive investments as and when they arise.

We have delivered a strong occupancy performance over recent years and, after a significant level of acquisition and development activity over the last six years, we still have 1.4m square feet of fully invested currently unlet space in our UK, Paris, Spain and Benelux markets in addition to 1.4m of pipeline space. Our most significant upside opportunity is from filling our existing unlet space and that remains our priority. The business has demonstrated its inherent resilience in recent times and, despite the challenging macroeconomic environment, we are confident in the future of the business. As guided at our third quarter results announcement, the Board anticipates that the business will deliver Adjusted Diluted EPRA Earnings per Share ⁷ for 2021/22 of at least 47p".

Business Highlights

UK Trading Performance

UK Operating Performance	Q4 2022	Q4 20212	Change
Revenue (£'m)	42.8	40.0	7.0%
Revenue (£'m)- year-to-date (YTD)	163.0	144.1	13.1%
Closing Occupancy (let sq ft- million)3	4.637	4.690	-1.1%
Closing Occupancy (% of MLA)	82.6%	85.4%	-2.8ppts
Maximum Lettable Area (MLA- million)4	5.620	5.490	2.4%
Average Storage Rate (£)	29.58	27.12	9.1%
Average Storage Rate (£)- YTD	28.79	25.32	13.7%

UK Operating Performance- like-for-like3	Q4 2022	Q4 20212	Change
Revenue (£'m)	41.9	39.6	5.8%
Revenue (£'m)- year-to-date (YTD)	160.2	142.8	12.2%
Closing Occupancy (let sq ft- million)4	4.538	4.648	-2.4%
Closing Occupancy (% of MLA)5	83.0%	85.6%	-2.6ppts
Average Occupancy (let sq ft- million)	4.587	4.681	-2.0%
Average Occupancy (let sq ft- million)- YTD	4.537	4.512	0.6%
Average Storage Rate (£)	29.74	27.23	9.2%
Average Storage Rate (£)- YTD	28.94	25.40	13.9%

The UK performed well in the final quarter with total revenue up 7.0% and like-for-like revenue up 5.8%. For the full year, like-for-like revenue was up 12.2% compared to 2021. This performance built on a record fourth quarter in 2021 when like-for-like revenue was up 23.4%.

As ever, the Group looks to find an appropriate balance of rate growth and occupancy performance in order to maximise revenue.

The UK result was driven by an excellent like-for-like average rate which remained strong and was up 9.2% on the fourth quarter of 2021. The like-for-like average rate also grew sequentially by 3.8% compared to the third quarter of 2022.

In line with normal seasonal trading patterns, occupancy reduced in the final quarter. Like-for-like closing occupancy closed the year at 83.0% (2021: 85.6%).

Average occupancy grew by 0.6% over the course of the year.

Total revenue for the year-to-date grew by 13.1% reflecting our strong like-for-like performance, the 2021 store opening in Birmingham Middleway offset by the closure of Birmingham Digbeth, the December 2021 acquisition of Christchurch, and the December 2021 opening of our London Bow store. All acquisitions, new store developments and extensions are performing in line with or ahead of their business cases.

Paris Trading Performance

Paris Operating Performance	Q4 2022	Q4 20212	Change
Revenue (€'m)	12.63	12.19	3.6%
Revenue (€'m)- year-to-date (YTD)	48.76	45.96	6.1%
Closing Occupancy (let sq ft- million)3	1.112	1.100	1.1%
Closing Occupancy (% of MLA)	81.7%	80.7%	+1.0ppts
Maximum Lettable Area (MLA- million)4	1.360	1.360	-
Average Storage Rate (€)	40.93	39.76	2.9%
Average Storage Rate (€)- YTD	40.47	38.90	4.0%
Revenue (£'m)	10.9	10.4	4.8%
Revenue (£'m)- year-to-date (YTD)	41.4	39.9	3.8%

Paris Operating Performance- like-for-like3	Q4 2022	Q4 20212	Change
Revenue (€'m)	12.47	12.17	2.5%
Revenue (€'m)- year-to-date (YTD)	48.37	45.94	5.3%
Closing Occupancy (let sq ft- million)4	1.094	1.097	-0.3%
Closing Occupancy (% of MLA)5	83.4%	83.6%	-0.2ppts
Average Occupancy (let sq ft- million)	1.104	1.109	-0.5%
Average Occupancy (let sq ft- million)- YTD	1.092	1.077	1.4%
Average Storage Rate (€)	41.07	39.76	3.3%
Average Storage Rate (€)- YTD	40.56	38.90	4.3%
Revenue (£'m)	10.8	10.4	3.8%
Revenue (£'m)- year-to-date (YTD)	41.1	39.9	3.0%

Our Paris business had a solid quarter growing total revenue by 3.6% year-on-year.

Like-for-like occupancy performance was robust for the quarter with closing occupancy at 83.4%, down 0.2ppts compared to Q4 2021. The like-for-like average rate was up by 3.3% and drove like-for-like revenue growth of 2.5%. Our like-for-like average storage rate also grew sequentially by 1.9% compared to the third quarter of our 2022 financial year.

Total revenue for the year-to-date grew by 6.1% reflecting the good like-for-like performance (up 5.3% compared to 2021) and the 2021 opening of our Magenta store.

Sterling equivalent like-for-like revenue was impacted by the 1.3% weakening in the Sterling: Euro exchange rate for the quarter compared to Q4 2021. As a result, sterling equivalent total and like-for-like revenue grew by 4.8% and 3.8% respectively compared to Q4 2021.

Spain Trading Performance⁶

Spain Operating Performance	Q4 2022	Q4 20212	Change
Revenue (€'m)	0.96	0.88	9.1%
Revenue (€'m)- year-to-date (YTD)	3.59	3.29	9.1%
Closing Occupancy (let sq ft- million)3	0.095	0.093	2.2%
Closing Occupancy (% of MLA)	78.9%	86.0%	-7.1ppts
Maximum Lettable Area (MLA- million)4	0.120	0.110	9.1%
Average Storage Rate (€)	34.88	34.36	1.5%
Average Storage Rate (€)- YTD	34.07	32.25	5.6%
Revenue (£'m)	0.8	0.7	14.3%
Revenue (£'m)- year-to-date (YTD)	3.0	2.8	7.1%

Spain Operating Performance- like-for-like3	Q4 2022	Q4 20212	Change
Revenue (€'m)	0.94	0.88	6.8%
Revenue (€'m)- year-to-date (YTD)	3.57	3.29	8.5%
Closing Occupancy (let sq ft- million)4	0.093	0.093	-
Closing Occupancy (% of MLA)5	85.9%	86.0%	-0.1%ppt
Average Occupancy (let sq ft- million)	0.095	0.094	1.1%
Average Occupancy (let sq ft- million)- YTD	0.094	0.096	-2.1%
Average Storage Rate (€)	35.02	34.36	1.9%
Average Storage Rate (€)- YTD	34.11	32.25	5.8%
Revenue (£'m)	0.8	0.7	14.3%
Revenue (£'m)- year-to-date (YTD)	3.0	2.8	7.1%

Our Spanish business saw a strong 6.8% growth in like-for-like revenue in the quarter and 8.5% growth for the full year. Closing occupancy ended the year at 85.9%, in line with 2021 (86.0%).

The average storage rate grew by 1.9% to €35.02 compared to €34.36 for Q4 2021. This rate grew sequentially by 5.4% compared to the third quarter of 2022.

Ancillary revenue growth was strong and, as a result, total revenue grew by 9.1% compared to Q4 2021.

Following the acquisition of four stores in Barcelona less than three years ago, the business has already opened one new site and has added a pipeline of eight stores across Barcelona and Madrid and we look with confidence to the continued expansion of the portfolio.

Benelux Trading Performance

Our Netherlands and Belgium businesses were acquired on 30 March 2022 and, therefore, contributed seven month's revenue (€5.9m) in the period.

The Benelux businesses grew revenue by 5.3% compared to the third quarter of 2022 and the businesses ended the period with a combined closing occupancy of 78.8%.

The business was originally established in 2019 with the acquisition of six stores and it has been subsequently developed into a 15-store portfolio with a pipeline of four additional stores.

Refinancing

Since the end of the financial year, the Group has completed the refinancing of its revolving credit facilities (RCFs) which were due to expire in June 2023.

The previous £250m sterling and €70m euro secured RCFs have been replaced with a single multi-currency unsecured £400m facility. In addition, a further £100m uncommitted accordion facility is incorporated into the facility agreement.

The facility is for a four-year term with two one-year extension options exercisable after the first and second years of the agreement.

The Group will pay interest at a margin of 1.25% plus SONIA or Euribor depending on whether the borrowings are drawn in Sterling or Euros. The margin is at the same level as the previous facility agreements.

A commitment fee of 35% of the margin is payable on undrawn amounts under the facility. This has reduced from 40% under the previous facility agreements.

Reflecting the Group's improved credit profile, the banking group and existing US Private Placement Noteholders have agreed that all of the Group's previously secured borrowings move to an unsecured basis, thus reducing administrative and legal costs associated with the facilities.

The main covenants under all of the Group's borrowings are a Group Loan to Value (LTV) covenant of 60% (replacing separate UK and French LTV covenants) and an Interest Cover Ratio covenant of 2.4x.

The hedging arrangements under the previous facility agreements have been continued under the new agreements. Therefore, the Group benefits from £55m of Interest Rate Swaps until 30 June 2023 at a rate of 0.6885%.

Environmental Social and Governance (ESG) KPI's are in the process of being agreed with the Group's lenders. Once finalised, the margin under the facility will be linked to performance against the ESG targets.

Property Pipeline Developments

Openings in the period

Winchester Extension

An 11,000 sq ft extension to our existing Winchester store opened in the quarter. The existing store has an MLA of 42,000 sq ft and has peaked at more than 90% occupancy.

New Development Sites

UK

Three new sites have been secured since our third quarter announcement.

In Romford in London, we have secured a freehold site with an existing warehouse which will be converted, subject to planning permission, to a 41,000 sq ft store.

In Crayford, we have secured a leasehold site on which we will convert an existing warehouse to a 9,400 sq ft extension to our existing Crayford site.

In Walton-on-Thames in London, we have secured a freehold site with an existing warehouse which will be converted, subject to planning permission, to a 20,700 sq ft store.

Our total UK development pipeline now amounts to c. 511,800 sq ft of which c. 415,100 sq ft is in London.

Paris

In Paris we have secured two new sites during the last quarter.

Paris East 1 and Paris North West 1 are freehold sites on which we will convert existing buildings, subject to planning, to 60,000 sq ft and 54,000 sq ft stores respectively.

Our Paris West 2 site did not receive planning permission and has been removed from the pipeline.

Our Paris pipeline now amounts to c. 349,200 sq ft.

Spain

A new freehold site has been secured in Southern Madrid (Southern Madrid 2) on which we will convert an existing building, subject to planning permission, into a 68,800 sq ft storage facility.

Our Spanish pipeline now amounts to c. 347,300 sq ft including 250,600 sq ft across five stores in Madrid and 96,700 sq ft over three stores in Barcelona.

Netherlands

In the Netherlands we have secured two new sites in the last quarter.

New freehold sites have been secured in Amsterdam and Aalsmeer where we will build new stores, subject to planning, of 61,400 sq ft and 48,400 sq ft respectively.

In the Netherlands, our pipeline now consists of 212,300 sq ft of space in four stores.

Planning Permissions

Since our third quarter announcement, planning permissions have been granted for our sites in Eastern Madrid, Northern Barcelona and South Barcelona.

Pipeline Summary

Our pipeline of c. 1.4m sq ft represents c. 18% of our existing property portfolio.

Opening 2023	FH/LH	Status*	MLA	Other
Redevelopments and Extensions
London- Crayford	LH	C, UC	9,400	Extension
Paris- Pyrenees	LH	C, UC	22,200	Extension
New Developments
London- Morden	FH	C, PG, UC	52,000	New build
Wigan	FH	C, UC	42,700	Conversion
Paris- South Paris	FH	C, PG	55,000	New build
Paris- West 1	FH	CE, STP	56,000	New build
Paris- West 3	FH	CE, STP	58,000	New Build
Paris- East 1	FH	CE, STP	60,000	Conversion
Paris- North West 1	FH	CE, STP	54,000	Conversion
Northern Madrid	FH	C, PG	53,000	Conversion
Southern Madrid	FH	C, PG	32,000	Conversion
Eastern Madrid	FH	C, PG	50,000	Conversion
Northern Barcelona	FH	C, PG	42,000	Conversion
South Barcelona	FH	C, PG	30,000	Conversion
Amersfoort- Netherlands	FH	CE, STP	58,000	New build
Almere- Netherlands	FH	C, STP	44,500	Conversion
Opening 2024
Redevelopments and Extensions
New Developments
London- Paddington Park West	FH	C, PG	13,000	Conversion, Satellite
London- Lea Bridge	FH	C, PG	76,500	New build
London- Romford	FH	C, STP	41,000	New build
Shoreham	FH	CE, STP	54,000	New build
South West Madrid	FH	CE, STP	46,800	Conversion
Southern Madrid 2	FH	CE, STP	68,800	Conversion
Central Barcelona 2	LH	CE, STP	24,700	Conversion
Amsterdam- Netherlands	FH	CE, STP	61,400	New build
Aalsmeer- Netherlands	FH	CE, STP	48,400	New build
Opening Beyond 2024
New Developments
London- Old Kent Road	FH	C, STP	76,500	New build
London- Woodford	FH	CE, PG	76,000	New build
London- Bermondsey	FH	C, STP	50,000	New build
London- Walton	FH	C, STP	20,700	Conversion
Paris- La Défense	FH	C, PG	44,000	Mixed use facility
Total Pipeline MLA (let sq ft- million)			c. 1.421
Total Outstanding CAPEX (£'m)			c. 138.0
*C = completed, CE = contracts exchanged, STP = subject to planning, PG = planning granted, UC = under construction

Lease Extensions and Assignments

During the period we have completed the extensions of two of our existing leases.

In Crayford, we have extended the lease on our existing store to 2042, with a tenant-only break option in 2032. A rent-free period of four months was agreed as part of this agreement. The lease on the new satellite store reported above also terminates in 2042.

In Sunderland, we have extended the lease on our store to 2047 with a tenant break option in 2037. A six-month rent-free period was agreed as part of this lease extension.

Ends

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 - Q4 2021 is the quarter ended 31 October 2021.

3 - Occupancy excludes offices but includes bulk tenancy. As of 31 October 2022, closing occupancy includes 24,000 sq ft of bulk tenancy (31 October 2021: 14,000 sq ft).

4 - MLA is Maximum Lettable Area.

5 - 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.

6 - The Spain business was acquired on 30 December 2019 with the four originally acquired stores now considered like-for-like.

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 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.

This announcement contains inside information.

Enquiries

Safestore Holdings PLC
Frederic Vecchioli, Chief Executive Officer	via Instinctif Partners
Andy Jones, Chief Financial Officer
www.safestore.com
Instinctif Partners
Guy Scarborough/ Bryn Woodward	07917 178920 / 07739 342009

Notes to Editors

· Safestore is the UK's largest self-storage group with 179 stores on 31 October 2022, comprising 130 wholly owned stores in the UK (including 72 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, 5 stores in Spain, 9 stores in the Netherlands and 6 stores in Belgium.

· 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 more densely populated 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 90,000 personal and business customers.

· As of 31 October 2022, Safestore had a maximum lettable area ("MLA") of 7.698 million sq ft (excluding the expansion pipeline stores) of which 6.317 million sq ft was occupied.

· Safestore employs around 750 people in the UK, Paris, Spain, the Netherlands and Belgium.

 

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