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Storage

Safestore Fourth Quarter Trading Update

20th November 2018

The UK's largest self storage provider posted strong fourth quarter performance with the business growing revenue by 13.7% with like-for-like revenue growth of 6.0%. Performance was strong across all of the UK with London and the South East up 5.1% and regional UK up 8.3%.

Over the year, the business added occupancy of 132,000 sq ft on a like-for-like basis. As a result, Q4 like-for-like closing occupancy, at 74.7%, increased by 2.9 percentage points compared to the prior year.

Like-for-like average rate in the UK improved in the period and was up 2.6% compared to Q4 2017. Average rate has showed improving momentum as the year has progressed and finished the year up 0.5%.

When the impact of the acquisition of Alligator, combined with new store openings in Mitcham and Paddington Marble Arch offset by closures in Deptford, Merton, Leeds and Paddington being taken into consideration, revenue grew by 11.8% for the full year. New stores, in the initial period after opening, are dilutive to occupancy and rate. However, all new stores and Alligator are trading in line or ahead of our business plans.

Paris had another strong quarter growing revenue by 6.1% compared to last year.

On a like-for-like basis the business grew revenue by 5.1% for the quarter and also by 5.1% for the full year. This was driven by average occupancy growth of 6.0% for the year. Like-for-like occupancy grew by 36,000 sq ft for the year (2017: 68,000 sq ft) resulting in closing occupancy of 84.1%, up 1.5 percentage points compared to the prior year.

Like-for-like average rate in Paris was down 0.2% in the quarter but has, like the UK, shown improving momentum as the year has progressed. Excluding our lower priced suburban Emerainville store, which opened in September 2016, from the like-for-like stores the average rate was up 0.3% in the period.

The impact of the new stores opened in June 2017 at Combs-la-Ville and August 2018 at Poissy, in the west of Paris, is to dilute rate and occupancy in the initial period after trading commences. These stores, however, are trading ahead of our business plan.

The impact of the 1.5% weakening of Sterling over the year contributed to the Sterling equivalent total revenue increasing 6.8% on the prior year.

Following the quarter end, we extended the lease on our Edinburgh Gyle store by ten years. The lease now has eighteen years remaining and expires in 2036. In addition, a six month rent free period was agreed.

In our Interim Results this year we announced that we had exchanged contracts to acquire a freehold site in Carshalton in South London subject to planning permission. We have now received planning permission and have completed the acquisition of the site. We anticipate opening the c. 40,000 sq ft store in the second half of the 2019 financial year.
  
Frederic Vecchioli, Chief Executive Officer commented:

"I am pleased to report improving trading momentum has driven a strong fourth quarter, concluding another excellent year's performance. The Alligator portfolio of twelve stores, acquired at the beginning of the financial year, is fully integrated and performing well. The year's new store openings at London Mitcham, Paddington Marble Arch and Paris-Poissy are trading in line or ahead of our business plans.

Further to our successful openings this year, we plan to open new stores in London-Carshalton, Paris-Pontoise, Paris-Magenta and Birmingham-Merry Hill in the 2018/2019 financial year.

Our strong balance sheet continues to provide the flexibility to target selected development and acquisition opportunities as they arise.

The company is in an excellent position and, as ever, our top priority remains the significant organic growth opportunity represented by the 1.7m square feet of currently unlet space in our existing fully invested estate. Our leading market positions in the UK and Paris combined with our resilient business model enable us to withstand any macro-economic uncertainty that may arise over the coming months and we look forward to the future with confidence."
 
Outlook:

Performance was strong in the final quarter across the Group and we anticipate that our Adjusted Diluted EPRA earnings per share6 will be in line with consensus for the year-ended 31 October 2018. Our strong market positions and geographical diversity means that we believe we are well placed to withstand any macroeconomic uncertainty in the UK and we look forward with confidence to the 2018/19 financial year.