Safestore swoops for Stork to immediately lift earnings

Safestore sealed the £56m cash acquisition of Stork Self Storage, trading as Alligator, that it expects to boost earnings immediately upon completion.

The purchase, which the FTSE 250-listed company announced overnight and will be funded from existing group debt facilities, adds 12 mostly freehold outlets to expand Safestore's portfolio to 146 stores, of which 120 are wholly owned and 26 are in Paris.

Alligator's pro forma EBITDA after rent is currently roughly £4.3m per year on turnover of £7.5m.

Safestore said at the consideration price, the portfolio has an implied first year net operating income yield of around 7.7%.

Chief executive Frederic Vecchioli said: "Over the past fifteen months, Safestore has cemented its market leading position in the UK, investing £100m in two earnings accretive acquisitions, and opening four new sites with a further two stores in the pipeline.

"These transactions have supplemented the organic growth being delivered by the existing business."

Analysts at Liberum said the purchase "may not be as stand-out as its earlier purchase of SpaceMaker, but it is still highly attractive, providing immediate earnings accretion and further self-help potential".

With the UK regional portfolio well located, potential to lift both rates and occupancy levels from 68% to a stabilised rate close to 80% and an already attractive 7.7% yield that could rise to around 10%, Liberum calculated the acquisition will be 6% accretive to its previous earnings forecasts, with limited additional investment required in the portfolio.

"Safestore continues to deliver positive LFL growth, underpinned by its regional diversity, and further enhanced by self-help potential from new and acquired stores."