7 September 2023
Safestore Holdings plc
Third quarter trading update for the period 1 May 2023 to 31 July 2023
Further strategic progress and continued revenue growth
| Group Operating Performance | Q3 2023 | Q3 20222 | Change | Change- CER1 |
| Revenue (£'m) | 56.5 | 54.7 | 3.3% | 2.9% |
| Revenue (£'m)- year-to-date (YTD) | 166.6 | 155.7 | 7.0% | 6.0% |
| Closing Occupancy (let sq ft- million)3 | 6.389 | 6.461 | -1.1% | n/a |
| Closing Occupancy (% of MLA) | 79.1% | 84.3% | -5.2ppts | n/a |
| Maximum Lettable Area (MLA)4 | 8.080 | 7.670 | 5.3% | n/a |
| Average Storage Rate (£) | 29.68 | 28.59 | 3.8% | 3.5% |
| Average Storage Rate (£)- YTD | 30.27 | 29.11 | 4.0% | 3.1% |
| REVPAF9 (£)- YTD | 27.56 | 27.15 | 1.5% | 0.7% |
| Group Operating Performance- like-for-like3 | Q3 2023 | Q3 20222 | Change | Change- CER1 |
| Revenue (£'m) | 52.7 | 52.0 | 1.3% | 1.2% |
| Revenue (£'m)- year-to-date (YTD) | 156.2 | 151.4 | 3.2% | 2.4% |
| Closing Occupancy (let sq ft- million)4 | 5.744 | 5.952 | -3.5% | n/a |
| Closing Occupancy (% of MLA)5 | 81.8% | 85.3% | -3.5%ppts | n/a |
| Average Occupancy (let sq ft- million) | 5.643 | 5.846 | -3.5% | n/a |
| Average Occupancy (let sq ft- million)- YTD | 5.568 | 5.753 | -3.2% | n/a |
| Average Storage Rate (£) | 31.04 | 29.62 | 4.8% | 4.5% |
| Average Storage Rate (£)- YTD | 31.57 | 29.60 | 6.7% | 5.8% |
| REVPAF9 (£)- YTD | 29.76 | 29.01 | 2.6% | 1.8% |
Highlights
· Group revenue for the quarter in CER1 up 2.9% and 3.3% at actual exchange rates
· Like-for-like5 Group revenue for the quarter in CER1 up 1.2%
o UK up 0.7%
o Paris up 3.2%
o Spain down 2.2%
· Like-for-like5 average rate for the quarter up 4.5% in CER1
o UK up 4.4%
o Paris up 4.3%
o Spain up 5.6%
· Like-for-like5 closing occupancy at 81.8% (2022: 85.3%)
o UK down 4.0ppts at 81.8% (2022: 85.8%)
o Paris down 0.7ppts at 82.1% (2022 82.8%)
o Spain down 8.2ppts at 82.8% (2022: 91.0%)
· Two new store openings in the period in Eastern Madrid and South Barcelona with a combined MLA of 81,000 sq ft.
· Three new sites secured in Watford and Eastleigh in the UK and in Pamplona in Spain adding 132,000 sq ft of MLA to the pipeline.
· Two new extensions of existing sites added at London- Holloway and Paris- Poissy adding 21,500 sq ft of MLA.
· Group Property Pipeline of 1.523m sq ft representing c. 19% of the existing portfolio.
Frederic Vecchioli, Chief Executive Officer, commented:
"After very strong comparative quarters in the last two years (18.6% like-for-like revenue growth in 2021 and 9.5% in 2022), I am pleased to report that the group has delivered further like-for-like revenue growth as well as what we believe to be industry leading REVPAF in our key markets. Whilst we have seen some softness in the UK's business customer segment, reflective of a weaker macroeconomic environment, trading with our domestic customers and the remainder of the business has been robust.
We have opened a further two new stores in the period in Spain and added five new stores or extensions in the UK, Paris and Spain to our pipeline which represents 19% of our existing portfolio's MLA. We anticipate that our pipeline will continue to grow over the coming months. Our strong and flexible balance sheet has significant funding capacity, allowing us to continue to consider and execute strategic investments as and when they arise. Whilst the pipeline and associated financing will be dilutive to earnings in the near term, the returns generated by new stores are reliable and we are confident that it will be significantly value-accretive as the new sites mature.
Alongside our attractive development pipeline, we continue to prioritise the significant upside from filling our 1.7m square feet of fully invested, currently unlet space. The business has demonstrated its inherent resilience in recent times and we look to the future with confidence.
For 2023, we anticipate that the business will deliver Adjusted Diluted EPRA Earnings per Share7 towards the lower end of the range of analysts' forecasts8 of 47.3p to 50.3p".
Business Highlights
UK Trading Performance
| UK Operating Performance | Q3 2023 | Q3 20222 | Change | |
| Revenue (£'m) | 42.1 | 41.3 | 1.9% | |
| Revenue (£'m)- year-to-date (YTD) | 123.8 | 120.2 | 3.0% | |
| Closing Occupancy (let sq ft- million)3 | 4.611 | 4.768 | -3.3% | |
| Closing Occupancy (% of MLA) | 80.5% | 85.2% | -4.7ppts | |
| Maximum Lettable Area (MLA)4 | 5.730 | 5.600 | 2.3% | |
| Average Storage Rate (£) | 29.73 | 28.50 | 4.3% | |
| Average Storage Rate (£)- YTD | 30.24 | 28.52 | 6.0% | |
| REVPAF9 (£)- YTD | 28.89 | 28.71 | 0.6% | |
| UK Operating Performance- like-for-like3 | Q3 2023 | Q3 20222 | Change |
|
| Revenue (£'m) | 41.0 | 40.7 | 0.7% | |
| Revenue (£'m)- year-to-date (YTD) | 121.1 | 118.7 | 2.0% | |
| Closing Occupancy (let sq ft- million)4 | 4.536 | 4.725 | -4.0% | |
| Closing Occupancy (% of MLA)5 | 81.8% | 85.8% | -4.0ppts | |
| Average Occupancy (let sq ft- million) | 4.451 | 4.635 | -4.0% | |
| Average Occupancy (let sq ft- million)- YTD | 4.383 | 4.563 | -3.9% | |
| Average Storage Rate (£) | 29.80 | 28.54 | 4.4% | |
| Average Storage Rate (£)- YTD | 30.30 | 28.56 | 6.1% | |
| REVPAF9 (£)- YTD | 29.18 | 28.81 | 1.3% | |
The UK built on an extremely strong third quarter in 2022 (like-for-like revenue growth of 10.7%) with like-for-like revenue growth of 0.7% and total revenue growth of 1.9% in the quarter. Like-for-like average storage rate was up 4.4% in the quarter compared to the prior year and offset an average occupancy decline of 4.0% as the Group looks to find an appropriate balance of rate growth and occupancy performance in order to maximise revenue.
The like-for-like occupancy inflow in the quarter was 185,000 sq ft (Q3 2022; 210,000 sq ft) resulting in closing like-for-like occupancy of 81.8% (Q3 2022: 85.8%).
Over the last two quarters our domestic customer performance has been robust whilst business customer demand has been softer. In Q3 2023 the year-on-year decline in the like-for-like occupancy inflow was driven by business customers whilst we saw a year-on-year improvement from our domestic customers. Two thirds of the decline in our like-for-like closing occupancy, compared to Q3 2022, was driven by business customers. As at Q3 2023, the like-for-like occupancy in sq ft is down 4.0% with domestic occupancy down 2.2% and business occupancy down 6.5%.
REVPAF has grown by 1.3% for the year-to-date and was flat in the quarter compared to Q3 2022.
Enquiry levels for the third quarter, whilst behind the same period in 2022, remained significantly ahead of the pre-pandemic period.
Paris Trading Performance
| Paris Operating Performance- Total and like-for-like3 | Q3 2023 | Q3 20222 | Change | |
| Revenue (€'m) | 12.72 | 12.33 | 3.2% | |
| Revenue (€'m)- year-to-date (YTD) | 37.53 | 36.13 | 3.9% | |
| Closing Occupancy (let sq ft- million)3 | 1.118 | 1.128 | -0.9% | |
| Closing Occupancy (% of MLA) | 82.1% | 82.8% | -0.7ppts | |
| Average Occupancy (let sq ft- million) | 1.104 | 1.114 | -0.9% | |
| Average Occupancy (let sq ft- million)- YTD | 1.098 | 1.096 | 0.2% | |
| Maximum Lettable Area (MLA)4 | 1.360 | 1.360 | - | |
| Average Storage Rate (€) | 41.87 | 40.16 | 4.3% | |
| Average Storage Rate (€)- YTD | 41.97 | 40.31 | 4.1% | |
| REVPAF9 (€)- YTD | 36.85 | 35.47 | 3.9% | |
| Revenue (£'m) | 10.9 | 10.5 | 3.8% | |
| Revenue (£'m)- year-to-date (YTD) | 32.7 | 30.5 | 7.2% | |
Our Paris business had a solid quarter growing total and like-for-like revenue by 3.2% year-on-year.
Like-for-like occupancy performance was slightly down on Q3 2022 with closing occupancy at 82.1%, down 0.7ppts compared to Q3 2022. The occupancy inflow in the quarter was 27,000 sq ft (Q3 2022; 30,000 sq ft).
The like-for-like average rate performed well and was up by 4.3% which offset the slight decline in occupancy leading to like-for-like revenue growth of 3.2%.
Sterling equivalent like-for-like revenue was impacted by the 1.2% weakening in the Sterling:Euro exchange rate for the quarter compared to Q3 2022. As a result, sterling equivalent total and like-for-like revenue grew by 3.8% compared to Q3 2022.
Our industry leading REVPAF has grown by 3.9% in the year-to-date.
Enquiry levels for the third quarter were broadly in line with the same period in 2022.
Spain Trading Performance6
| Spain Operating Performance | Q3 2023 | Q3 20222 | Change | |
| Revenue (€'m) | 1.11 | 0.91 | 22.0% | |
| Revenue (€'m)- year-to-date (YTD) | 3.06 | 2.63 | 16.3% | |
| Closing Occupancy (let sq ft- million)3 | 0.133 | 0.099 | 34.3% | |
| Closing Occupancy (% of MLA) | 40.3% | 91.6% | -51.3ppts | |
| Maximum Lettable Area (MLA)4 | 0.330 | 0.110 | 200.0% | |
| Average Storage Rate (€) | 30.43 | 33.19 | -8.3% | |
| Average Storage Rate (€)- YTD | 33.51 | 33.78 | -0.8% | |
| REVPAF9 (€)- YTD | 12.45 | 32.58 | -61.8% | |
| Revenue (£'m) | 1.0 | 0.8 | 25.0% | |
| Revenue (£'m)- year-to-date (YTD) | 2.7 | 2.2 | 22.7% | |
| Spain Operating Performance- like-for-like3 | Q3 2023 | Q3 20222 | Change | |
| Revenue (€'m) | 0.89 | 0.91 | -2.2% | |
| Revenue (€'m)- year-to-date (YTD) | 2.69 | 2.63 | 2.3% | |
| Closing Occupancy (let sq ft- million)3 | 0.090 | 0.099 | -9.1% | |
| Closing Occupancy (% of MLA) | 82.8% | 91.0% | -8.2%ppts | |
| Average Occupancy (let sq ft- million) | 0.088 | 0.097 | -9.3% | |
| Average Occupancy (let sq ft- million)- YTD | 0.087 | 0.094 | -7.4% | |
| Average Storage Rate (€) | 35.10 | 33.24 | 5.6% | |
| Average Storage Rate (€)- YTD | 36.48 | 33.80 | 7.9% | |
| REVPAF9 (€)- YTD | 33.18 | 32.57 | 1.9% | |
| Revenue (£'m) | 0.8 | 0.8 | - | |
| Revenue (£'m)- year-to-date (YTD) | 2.4 | 2.2 | 9.1% | |
In the quarter, our Spanish business grew revenue by 22.0% in total with like-for-like revenue declining by 2.2%.
The like-for-like average storage rate grew by 5.6% to €35.10 compared to €33.24 for Q3 2022. This increase in the like-for-like average rate in addition to an increase in like-for-like ancillary revenues of 8.5% were offset by a reduction in like-for-like average occupancy of 9.3% to drive the like-for-like revenue decline of 2.2%.
Like-for-like occupancy in Barcelona has initially been diluted by the new Central Barcelona 2 and Barcelona 3 stores having opened in close proximity and within the same catchment area as an existing store. Management believes that, given the limited supply in central Barcelona, once the absorption phase has been passed, the stores will generate higher revenue and profits and provide significant long-term value.
The reduction in total occupancy to 40.3% reflects the dilutive effect of recent store openings.
Sterling equivalent like-for-like revenue was impacted by the 1.2% weakening in the Sterling:Euro exchange rate for the quarter compared to Q3 2022. As a result, sterling equivalent total and like-for-like revenue was flat compared to Q3 2022.
Following the acquisition of four stores in Barcelona at the end of 2019, the business has built scale quickly by opening six new sites and adding a pipeline of six stores across Barcelona, Madrid and Pamplona. We look with confidence to the continued expansion of the 16-store portfolio.
Benelux Trading Performance
Our Netherlands and Belgium businesses, acquired on 30 March 2022, contributed €2.89m revenue in the period and €8.36m in the year-to-date.
The Benelux businesses grew revenue by 17.0% compared to the third quarter of 2022 and the businesses ended the period with a combined closing occupancy of 79.8%.
For the year-to-date, total revenue has increased by €5.1m compared to Q3 2022.
The business was originally established in 2019 with the acquisition of six stores and was subsequently developed into a 16-store portfolio with a pipeline of five additional stores, further details of which are set out below.
Property Pipeline Developments
Openings of New Stores and Extensions in the period
| Open 2023 | FH/LH | Opening Date | MLA | Other |
| New Developments | ||||
| Eastern Madrid | FH | Q3 2023 | 50,000 | Conversion |
| South Barcelona | FH | Q3 2023 | 30,600 | Conversion |
Two new freehold stores in Eastern Madrid and South Barcelona were opened in the period adding 80,600 sq ft of MLA. The Spanish business now operates ten stores and has a pipeline of a further six.
New Development Sites
Three new sites have been added to the development pipeline in the third quarter.
Eastleigh
We have added a new freehold site at Eastleigh in Hampshire. This store will operate as a satellite to our Winchester and two Southampton stores. The conversion of an existing building is underway and we anticipate opening a 14,000 sq ft store in 2024.
Watford
The Group has been working on the acquisition of a prominent freehold site on the A4178 close to central Watford for over two years. The acquisition has now completed and, subject to planning, we anticipate opening a 46,750 sq ft new build store in 2025.
Pamplona (Spain)
The Group's strategy in Spain is to develop clusters of stores in key cities and regions. The Basque Country has a population of two million people and enjoys a dynamic and healthy economy. We have acquired our first site in this region in Pamplona which itself has a population of 209,000 people in the city and 355,000 in the wider metropolitan area.
Subject to planning, the Group will convert an existing building into a 71,000 sq ft freehold store which, we anticipate, will open in 2025.
New Store Extensions
During the quarter we have identified the opportunity to extend two stores via the acquisition of additional buildings or the extension of existing sites. These are expected to further enhance our return on investment at these locations.
The extensions at Holloway in London and Poissy in Paris will collectively add 21,500 sq ft and will open in 2024.
Pipeline Summary
We are leveraging our effective and scalable operating platform to increase our expansion plans across both the UK and continental Europe. This approach has resulted in the largest development pipeline in our history which can be funded from our existing financial resources. This pipeline of c. 1.5m sq ft represents c. 19% of our existing property portfolio.
As illustrated in our half year results presentation, the pipeline and associated financing is dilutive to earnings in the near term but, as the stores mature, we are confident that significant earnings and value accretion will be realised.
| Opening 2023 | FH/LH | Status* | MLA | Other |
| Redevelopments and Extensions | ||||
| London- Paddington Marble Arch | LH | C | 8,400 | Extension |
| New Developments | ||||
| Ellesmere Port | FH | C, UC | 55,000 | New build |
| Central Barcelona 3 | LH | C | 14,700 | Conversion |
| Amersfoort- Netherlands | FH | C, UC | 58,000 | New build |
| Opening 2024 | | | | |
| Redevelopments and Extensions | ||||
| London- Holloway | FH | C, STP | 9,500 | Extension |
| Paris- Poissy | FH | C, UC | 12,000 | Extension |
| Paris- Pyrenees | LH | C, UC | 22,200 | Extension |
| New Developments | ||||
| London- Paddington Park West | FH | C, UC | 13,000 | Conversion, Satellite |
| London- Lea Bridge | FH | C, UC | 76,500 | New build |
| Eastleigh | LH | C, UC | 14,000 | Conversion, Satellite |
| London- Romford | FH | C, STP | 41,000 | New build |
| Paris- South Paris | FH | C, UC | 55,000 | New build |
| Paris- West 3 | FH | C, UC | 58,000 | New build |
| Paris- East 1 | FH | CE, PG | 60,000 | Conversion |
| Paris- North West 1 | FH | C, STP | 54,000 | Conversion |
| South West Madrid | FH | C, STP | 46,800 | Conversion |
| Southern Madrid 2 | FH | C, UC | 68,800 | Conversion |
| Central Barcelona 2 | LH | C, PG | 20,400 | Conversion |
| North East Madrid | FH | CE, STP | 66,000 | Conversion |
| Almere- Netherlands | FH | C, UC | 44,500 | Conversion |
| Aalsmeer- Netherlands | FH | C, UC | 48,400 | New build |
| Rotterdam- Netherlands | FH | C, UC | 71,000 | New build |
| Opening 2025 | ||||
| New Developments | ||||
| London- Woodford | FH | C, PG | 76,000 | New build |
| London- Walton | FH | C, PG | 20,700 | Conversion |
| London- Watford | FH | CE, STP | 46,750 | New build |
| London- Wembley | FH | C, STP | 49,000 | New build |
| Paris- West 1 | FH | CE, PG | 56,000 | New build |
| Paris- La Défense | FH | C, UC | 44,000 | Mixed use facility |
| Pamplona | FH | C, STP | 71,000 | Conversion |
| Amsterdam- Netherlands | FH | CE, STP | 61,400 | New build |
| Opening Beyond 2025 | ||||
| New Developments | ||||
| London- Old Kent Road | FH | C, STP | 76,500 | New build |
| London- Bermondsey | FH | C, STP | 50,000 | New build |
| Shoreham | FH | CE, STP | 54,000 | New build |
| Total Pipeline MLA (let sq ft- million) | c. 1.523 | |||
| Total Outstanding CAPEX (£'m) | c. 135.0 | |||
| *C = completed, CE = contracts exchanged, STP = subject to planning, PG = planning granted, UC = under construction | ||||
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 - Q3 2022 is the quarter ended 31 July 2022.
3 - Occupancy excludes offices but includes bulk tenancy. As of 31 July 2023, closing occupancy includes 18,000 sq ft of bulk tenancy (31 July 2022: 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 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.
8 - The analyst consensus for Adjusted Diluted EPRA EPS for the current financial year, based on the forecasts of thirteen analysts, is 49.1p. The thirteen analyst forecasts range from 47.3p to 50.3p
9 - REVPAF is an alternative performance measure used by the business. REVPAF stands for Revenue per Available Square Foot and is calculated by dividing revenue for the period by weighted average available square feet for the same period.
Enquiries
| Safestore Holdings PLC |
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| Frederic Vecchioli, Chief Executive Officer | via Instinctif Partners |
| Andy Jones, Chief Financial Officer |
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| Instinctif Partners |
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| Guy Scarborough/ Bryn Woodward | 07917 178920 / 07739 342009 |
Notes to Editors
· Safestore is the UK's largest self-storage group with 187 stores on 31 July 2023, comprising 132 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, 10 stores in Spain, 10 stores in the Netherlands and 6 stores in Belgium. In addition, the Group operates 7 stores in Germany 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 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 July 2023, Safestore had a maximum lettable area ("MLA") of 8.080 million sq ft (excluding the expansion pipeline stores) of which 6.389 million sq ft was occupied.
· Safestore employs around 750 people in the UK, Paris, Spain, the Netherlands, and Belgium.
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