Safestore sees completion of Space Maker purchase by end July

Safestore said conditions needed to buy fellow storage outfit Space Maker Stores Limited had been satisfied and completion of the acquisition is expected by 29 July 2016.

“The acquisition is expected to be immediately accretive to group earnings per share from completion and will support the group's future dividend capacity,” Safestore said.

An initial payment of £43m less certain downward adjustments to the enterprise value will be payable in cash on completion of the acquisition. Up to £1.4m of deferred consideration may become payable in cash between six months and three years from the date of completion, subject to the SMS business achieving certain performance targets during that period.

In the year to 30 April 2016, SMS delivered earnings before interest, tax, depreciation and amortisation (before management fees) of £3.9m on turnover of £8.7m, Safestore said.

At the initial consideration price, the SMS portfolio has an implied first year net operating income yield of 9.4% before the impact of management charges which would rise to 12% if the SMS stores achieve 80% occupancy at today's rental rate levels, it added.

The SMS business, which had pro forma gross assets of £45.6m at 30 April 2015, will be acquired on a debt free basis with the total consideration expected to be around £44.4m and funded from existing debt facilities, with £45m of the group's £60m accordion facility converted into a committed revolving credit facility.