Safestore reports 'record-breaking year' of growth

Safestore reported a “record-breaking year” of growth in its final results on Thursday, with group revenue rising 15.1%, or 15.5% at constant exchange rates, to £186.8m, as its operating profit almost doubled.

The FTSE 250 storage provider said like-for-like group revenue for the 12 months ended 31 October at constant currency was up 13.8%, with the UK market growing 16.8% and Paris expanding by 4.3%.

Underlying EBITDA was ahead 26.2% at constant exchange rates which, combined with an increased gain on investment properties of £321.1m, resulted in statutory operating profit of £417m, up 96.5% on the £212.2m it recorded for the 2020 financial year.

Adjusted diluted EPRA earnings per share were up 34.1% at 40.5p, while diluted earnings per share surged to 176.4p from 84p a year earlier, largely due to the higher property valuation gain in the 2021 period.

The board declared a 38.6% increase in the final dividend to 17.6p, giving a total distribution for the year of 25.1p, compared to 18.6p for 2020.

Looking at the books, Safestore recorded a group loan-to-value ratio of 25%, down from 29% at the end of the 2020 financial year, and interest cover ratio rising to 10.5x from 9x over the same period.

Unused bank facilities totalled £252m at year-end, with no borrowings to refinance before June 2023.

In addition, the board noted there was a further uncommitted €115m shelf facility available from an existing lender.

Safestore’s property values increased 24%, including investment properties under construction, driven by an improved trading performance, new stores, revisions to exit cap rates and stabilised occupancy assumptions.

As a result, its pipeline continued to be financed by free cash flow and existing debt facilities.

“All geographies have performed strongly and have shown good momentum in the final quarter,” said chief executive officer Frederic Vecchioli.

“The UK business has traded particularly well in 2021, with closing occupancy up by six percentage points to a record 85.4% and an 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 percentage points of like-for-like occupancy growth for the year to 83.6%, grew like-for-like revenue by 4.3% which accelerated to 8.3% in the final quarter.”

Vecchioli said Safestore’s Spanish business, in its first full year of ownership, also performed ahead of its expectations.

“The Group has also made excellent strategic progress during the year - our property pipeline continues to grow and we now have 732,000 square feet of new space planned to open over the coming years in the UK, Paris and Spain, representing growth of 11% in the size of our estate.

“Our pipeline will be financed by our free cash flow and existing debt facilities and we anticipate continuing to add further sites over the coming months.

“Our balance sheet remains strong and our financing capacity allows us to continue to consider acquisition opportunities.”

Frederic Vecchioli noted that in December, the firm acquired Your Room Self Storage in Christchurch, Dorset for £2.45m, comprising a freehold store with a maximum lettable area of 14,000 square feet.

He said the store would be operated as an “automated satellite” of its two existing Bournemouth stores, with the company expecting the first year initial yield to be at least 6%.

“Since 2013, we have added 22.9 percentage points of occupancy to the 113 stores still in the group today, which now have an occupancy of 86.0% - an average increase of 2.9 points per annum.

“Over that period the same stores have grown at an average rate of 16.1% - a compound annual growth rate of 1.9% per annum.”

The company had weathered the pandemic well, Vecchioli explained, and remained in a “very strong” position.

“Despite the current high levels of occupancy, the business still has 1.1 million square feet of currently unlet space in its existing fully invested estate in addition to 0.8 million 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.”

At 0921 GMT, shares in Safestore Holdings were down 0.96% at 1,319.2p.