Safestore Holdings Plc · LSE:SAFE
Safestore — HY 2022 Earnings Presentation
67 slides from Safestore's earnings presentation, Jun 21, 2022
Slide 1: Half Year Presentation 21 June 2022
1 Half Year Presentation 21 June 2022
Slide 2: Introduction
Birmingham Middleway Store 2 Introduction Frederic Vecchioli
Slide 3: Continued strong record of value creation
3 Continued strong record of value creation Group Revenue (£m) Group Underlying EBITDA (£m) 70 100 +114% +165% +8.8% CAGR 60 +11.4% CAGR 80 50 60 40 101.0 65.2 30 88.1 54.4 40 79.3 69.2 73.1 45.9 62.6 20 39.1 41.4 50.4 54.1 34.9 47.1 46.9 27.5 30.1 20 24.6 25.6 10 0 0 HY 2013 HY 2014 HY 2015 HY 2016
Slide 4: Highlights
4 Highlights Strong Financial Performance • Group revenue up 14.6% and in CER up 15.9% • Group LFL storage revenue in CER up 16.4% and LFL total revenue up 14.5% • Adjusted Diluted EPRA EPS, up 24.3% at 22.5p (2021: 18.1p) • 25.3% increase in the interim dividend to 9.4p (2021: 7.5p) • Profit before
Slide 5: Highlights
5 Highlights Strategic Progress • Acquisition of remaining 80% of equity owned by Carlyle in the Benelux JV for an Enterprise Value of €146m. (15 stores with an MLA of 600,000 sq ft in the Netherlands and Belgium) • Acquisition of a satellite 14,000 sq ft store from Your Room Self Storage in Christc
Slide 6: Financials
6 Newcastle Central Store Financials Andy AndyJones Jones
Slide 7: Financial Highlights
7 Financial Highlights Income Statement and Cash Flow Change HY 2021 HY 2022 Absolute CER² Revenue (£’m) like-for-like1 99.1 13.3% 14.5% Underlying EBITDA (£’m) like-for-like1 64.2 18.9% 20.7% Revenue (£’m) 101.0 14.6% 15.9% Underlying EBITDA (£’m) 65.2 19.9% 21.1% Underlying EBITDA (post leasehold
Slide 8: Solid revenue growth across the portfolio
8 Solid revenue growth across the portfolio London / Rest of Group UK Total Paris Spain SE UK Total Act 2.347 2.139 4.486 1.080 0.093 5.659 Average Occupancy LFL1 (sq ft 'm) YOY 3.4% 2.9% 3.2% 2.7% -2.1% 3.0% Act 83.1% 81.0% 82.1% 82.9% 86.6% 82.3% Closing Occupancy LFL1 % YOY 0.8% ppt -0.3% ppt 0.3
Slide 9: Group P&L
9 Group P&L HY 2022 HY 2021 Total Total UK Paris Spain Benelux (CER) UK Paris Spain (CER) (£’m) (€’m) (€’m) (€’m) (£’m) (£’m) (€’m) (€’m) (£’m) Revenue 78.9 23.8 1.7 0.8 102.1 67.2 22.1 1.6 88.1 Underlying cost of sales (23.0) (5.9) (0.4) (0.3) (29.0) (21.8) (5.4) (0.3) (26.9) Store EBITDA 55.9 17.9
Slide 10: Rate and occupancy increase drives improved EBITDA (after leasehold rent)
10 Rate and occupancy increase drives improved EBITDA (after leasehold rent) HY 2021 to HY2022 EBITDA 65 Facilities and rates: (1.1) Volume related/remuneration: (0.2) New stores: (0.8) 1.3 2.1 60 0.3 0.1 55 12.7 50 59.1 45 47.6 CER 24.2% improvement 40 HY21 EBITDA Revenue LFL Revenue New Underlying
Slide 11: Excellent cash conversion
11 Excellent cash conversion HY 2022 HY 2021 (£'m) (£'m) Underlying EBITDA 65.2 54.4 Working Capital/ Exceptionals/ Other (0.1) (0.3) Adjusted operating cash inflow 65.1 54.1 Interest payments (5.0) (4.6) Leasehold rent payments (6.5) (6.5) Tax payments (2.9) (2.7) Free cash flow (before investing a
Slide 12: Strong and flexible Balance Sheet
12 Strong and flexible Balance Sheet Capital Structure Apr 22 Oct 21 Variance Apr 21 Property valuation (£’m)* 2,332.0 1,949.2 19.6% 1,702,0 UK (£’m)* 1,674.9 1,474.8 13.6% 1,265.9 FR (€’m)* 576.0 521.6 10.4% 476.7 ES (€’m)* 54.4 40.2 35.3% 24.8 NL/BE (€’m)* 153.3 - - - Gross Debt (£’m) 624.3 484.7
Slide 13: Consistent store margin progression over last 8.5 years
13 Consistent store margin progression over last 8.5 years Group Store EBITDA Margin % in CER – 113 stores open at October 2013 78.0% 76.0% 74.9% 74.0% 72.0% 70.0% 68.0% 66.0% 64.0% 64.2% 62.0% 60.0% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Store EBITDA Margin % Store EBITDA Margin % has gr
Slide 14: Guidance – non trading and one-off items
14 Guidance – non trading and one-off items Item Guidance Foreign exchange impact Weakening of the Euro (1.190 in HY2022, 1.184 in FY2021, 1.135 in HY2021) contributed a £0.6m loss of EBITDA after leasehold costs In the year, each 10c fluctuation from the HY2022 FX rate of 1.190 would equate to c. £
Slide 15: Operational Delivery
15 Nijmegen Store Operational Delivery Frederic Vecchioli Frederic Vecchioli
Slide 16: Scale: European digital platform
16 Scale: European digital platform Customer journey begins online • 90% of UK enquiries are online – of which c. 66% on a smartphone. Pandemic has accelerated shifts • Group marketing cost 3.5% of revenue (3.9% prior year) – lowest percentage in the last 8 years • Sustainable demand with group enqu
Slide 17: Stable trading at historically high level
17 Stable trading at historically high level Move-ins return to normal trends – supply constrained with larger units in many stores: Move-ins HY 2022 Move-in Sq ft HY 2022 vs Prior year vs Pre-Covid vs Prior year vs Pre-Covid UK +6.6% +18.7% UK -4.6% +18.9% FR -2.1% =0.0% FR -11.6% -0.3% ES +20.3% +
Slide 18: Balanced Revenue Management approach
18 Balanced Revenue Management approach Target is revenue growth with optimal combination of occupancy and rate: • Pricing analytics based on data warehouse with experience of 1,470,000 move-ins and customer life data points • Systems very reactive to change of circumstances for new and existing cus
Slide 19: Trading delivery and MLA extension
19 Trading delivery and MLA extension Closing Occupancy and Maximum Lettable Area 10.00 9.00 0.97 Stores 8.00 0.68 opened or 7.00 acquired Total MLA (m’ Sq Ft) 0.40 0.55 0.64 since Oct 0.51 0.56 0.50 6.00 2.15 0.35 1.08 1.45 1.73 1.63 13 1.00 1.04 5.00 0.50 - - - 1.00 0.77 0.68 0.80 0.80 4.00 1.34 1
Slide 20: Portfolio development
20 Portfolio development Pipeline: MLA FY of opening Continued self-funded expansion: London Lea Bridge 76,500 2025 London Old Kent road * 76,500 TBC • 2016 to HY 2022: MLA average increase of c. 421,000 London Woodford * 65,000 2025 sq ft per year through development and acquisitions London Morden
Slide 21: Further growth opportunities
21 Further growth opportunities As at 30 Apr 2022 Group London & UK Paris Spain Benelux SE Regions Current Maximum lettable area (m sq ft) 7.67 2.90 2.70 1.36 0.11 0.60 Let Square Feet (m sq ft) 6.19 2.36 2.19 1.10 0.09 0.45 Current Available space (m sq ft) 1.48 0.54 0.51 0.26 0.02 0.15 Future Pipe
Slide 22: Flexible investment model
22 Flexible investment model UK Lease regears – demonstrable track record • c. 64% of UK leases regeared since 2012 • All leases in England within renewal protection rights of the Landlord and Tenant Act Average Unexpired Lease Term (Yrs) 16 14 12 10 8 13.9 13.7 13.3 13.1 6 12.4 11.9 12.7 12.1 12.5
Slide 23: Sector leading total shareholder return
23 Sector leading total shareholder return Indexed TSR Performance since Safestore Indexed TSR Performance since Oct-2013 1200 IPO (2007) 1200 1000 1000 800 800 600 600 400 400 200 200 0 0 01/10/2007 01/10/2008 01/10/2009 01/10/2010 01/10/2011 01/10/2012 01/10/2013 01/10/2014 01/10/2015 01/10/2016 0
Slide 24: Well positioned for further growth
24 Well positioned for further growth Attractive market • Immature and growing industry • Very constrained supply growth Unique portfolio • Leading presence in London, Paris and key markets • 68% of revenue from London / South East and Paris • Unlet invested space equivalent to around 58 stores incl
Slide 25: Appendices
25 Appendices
Slide 26: Index
26 Index: CSR • 53 Development characteristics • 27 CSR Update • 54 London and Paris market position Financial • 56 UK regional market position • 33 Detailed P&L • 57 Paris development characteristics • 34 Non-underlying items • 58 French leases • 35 Detailed Balance Sheet • 36 Underlying to Statuto
Slide 27: Sustainability @ Safestore
27 Sustainability @ Safestore
Slide 28: We have aligned to relevant Sustainable Development Goals
28 We have aligned to relevant Sustainable Development Goals
Slide 29: Significant progress on GHG
29 Significant progress on GHG Total operational GHG* 53% below 2013 baseline Intensity of GHG emission 65% below 2013 level despite 35% growth in Group floor space (newer stores, energy mix, efficiency initiatives) -12% -13% YoY YoY Baseline year Baseline year 0.12 Kg CO2e / Sq. Ft (1.3 Kg/ Sq. M)
Slide 30: Safestore has low emissions intensity
30 Safestore has low emissions intensity Self Storage is the lowest emission intensity real estate sub-sector*, despite usually including some tenant emissions <1 Kg/ m2 using market-based method Safestore emissions less than 70% for scope 2 (100% renewable electricity supply in UK, ES) of self stor
Slide 31: Safestore ESG commitments
31 Safestore ESG commitments Target for Net Zero (MB) from operations by 2035 Safestore operational emissions include scope 1, 2 and selected scope 3 categories (electricity transmission, waste, water and business travel) LB = Location-based emissions, calculated using average emission factors relat
Slide 32: Strategy for operational net zero
32 Strategy for operational net zero We will be operationally carbon neutral (net zero) by 2035, through: a) reducing & optimising what we use & b) using only zero carbon energy • Completion of lighting efficiency • Installation of solar PV on new-build programme (external signage and stores where v
Slide 33: Detailed P&L
33 Detailed P&L Group HY 2022 HY 2021 £’m £’m Revenue 101.0 88.1 Cost of sales (29.1) (27.7) Gross profit 71.9 60.4 Administrative expenses (2.9) (14.9) Underlying EBITDA * 65.2 54.4 Exceptional Items 10.5 (1.9) Depreciation and variable lease payments (0.5) (0.8) Share based payments (6.0) (5.9) Sh
Slide 34: Non-underlying items
34 Non-underlying items HY 2022 HY 2021 (£'m) (£'m) Underlying EBITDA 65.2 54.4 Gain on investment properties and investment properties under 223.9 127.7 construction Depreciation (0.5) (0.5) Variable lease payments - (0.3) Share-based payments (6.0) (5.9) Exceptional items 10.5 (1.9) Share of assoc
Slide 35: Detailed Balance Sheet
35 Detailed Balance Sheet Group HY 2022 HY 2021 £’m £’m Assets Non-current assets Investment properties 2,271.1 1,683.8 Investment properties under construction 60.9 18.2 Other non-current assets 89.7 87.0 Non-current assets 2,421.7 1,789.0 Current assets 76.4 68.4 Liabilities Current liabilities (7
Slide 36: HY 2022 Underlying to Statutory adjustments
36 HY 2022 Underlying to Statutory adjustments Variable Share Underlying Derivative lease Valuation Finance Dep'n LH Share of Tax / CGS / Statutory Underlying Headings Exceptional based Statutory Headings P&L Movements payments/ Movement Lease Int properties Associate FX P&L payments Dep'n Sales 101
Slide 37: HY 2021 Underlying to Statutory adjustments
37 HY 2021 Underlying to Statutory adjustments Variable Share Underlying Derivative lease Valuation Finance Dep'n LH Share of Tax / CGS / Statutory Underlying Headings Exceptional based Statutory Headings P&L Movements payments/ Movement Lease Int properties Associate FX P&L payments Dep'n Sales 88.
Slide 38: Movement in Cost Base
38 Movement in Cost Base Cost of Sales Administrative Expenses HY 2022 HY 2021 HY 2022 HY 2021 (£'m) (£'m) (£'m) (£'m) Reported cost of sales (29.1) (27.7) Reported administrative expenses (2.9) (14.9) Adjusted for: Adjusted for: Depreciation 0.5 0.5 Share based payments 6.0 5.9 Variable lease payme
Slide 39: Group Banking Covenants – Apr -22
39 Group Banking Covenants – Apr -22 Covenants Interest Cover Ratio Loan to Value Consolidated level Not less than 2.40:1 Sterling Loan to Value Not more than 0.60:1 Euro Loan to Value Not more than 0.60:1
Slide 40: Group Debt position at 30 April 2022
40 Group Debt position at 30 April 2022 Bank Term Facility Drawn Hedged Hedged Margin Hedged Floating Total £/€'m £'m £'m % % Rate Rate Rate UK Revolver £250.0 £85.0 £55.0 65% 1.25% 0.8152% 0.69% 2.02% Jun-22/ UK Revolver- non-utilisation Jun-23 £165.0 - - - 0.50% - - 0.50% Euro Revolver €70.0 £25.2
Slide 41: Hedging of Euro Earnings – FX Forwards
41 Hedging of Euro Earnings – FX Forwards Value Date € Cover Forward Rate €’000 € H2 FY20 6,500 1.0751 H1 FY21 7,000 1.0751 H2 FY21 7,500 1.0751 H1 FY22 8,000 1.0751 H2 FY22 8,000 1.0751 H1 FY23 8,500 1.0751 • The group has hedged a proportion of its Euro denominated earnings, partially mitigating n
Slide 42: Diversified customer base
42 Diversified customer base • UK Mix of Business / Personal customers showing consistent movement each year towards Personal customers now 60% of sq ft occupied (59% FY2021 – 53% in 2015) c. 8% - 13% owner occupier Group Business and Personal Closing Sq Ft Let 7.0 6.0 5.0 2.5 2.4 2.2 4.0 2.1 2.1 3.
Slide 43: Revenue predictability and resilience
43 Revenue predictability and resilience Store square feet occupancy- split by year of customer move-in date: • 74% of FY 2021 revenue from Customers that moved-in before 31/10/2020 • Typically the customers moved in during the year make up 40% to 50% of the year end occupancy, but only between 20%
Slide 44: Diversified drivers and business geography generate resilient revenue and profits
44 Diversified drivers and business geography generate resilient revenue and profits c. 8% - 13% owner 2015 2016 2017 2018 2019 2020 2021 occupier Personal Customers Numbers (% of total) 74% 75% 75% 76% 77% 78% 78% Square feet occupied (% of 53% 54% 55% 56% 58% 59% 59% total) Square feet occupied (‘
Slide 45: National Accounts and Customer Support Centre
45 National Accounts and Customer Support Centre National Accounts: • Leverage UK platform further and accounts for 14% of all occupancy in the UK as at 30 April 2022 • Two-thirds of customers outside London Customer Support Centre: • CSC handled 18% of all enquiries in HY 2022 • Supports the sales
Slide 46: Portfolio strength with further potential
46 Portfolio strength with further potential • 178 store portfolio (As at Apr-22) • 7.7m maximum lettable area • 1.5m sq ft available – 0.8m London, South East and Paris • 49 stores within the M25 • 29 stores in Paris • 15 stores in Benelux countries UK • 4 stores in Barcelona (130 stores) • 23 stor
Slide 47: Densest network of stores in London and Paris
47 Densest network of stores in London and Paris Paris and London combined represent 78 stores – £54.6m of revenue, £40.0m of Store EBITDA
Slide 48: Paris unique competitive market position
48 Paris unique competitive market position Very solid market fundamentals: • 24 years of uninterrupted growth • Closing occupancy up 2.4% • Unique and densest network of stores in central Paris • Opportunity to leverage digital platform • Density of population in central Paris five times central Lo
Slide 49: Limited UK Supply
49 Limited UK Supply Growing and fragmented industry: • 2,050 self storage sites (of which 621 are container sites) – 1,015 storage businesses • Fragmented market with the six largest operators only owning 410 stores UK (130 stores) • 30 - 40 new stores per annum expected in 2022 and 2023 Immature i
Slide 50: Yield by financial year of opening
50 Yield by financial year of opening Cash on Cash Yield 20.0% Portfolio average 15.0% 10.0% 18.2% Investment hurdle (*) 16.9% 10.8% 11.1% 5.0% 7.0% 5.8% 0.0% -2.5% Non-mature recent investments -5.0% Pre-2016 2016 2017 2018 2019 2020 Oct-21 Cash on Cash is from Store EBITDA after rent divided by Hi
Slide 51: Property valuation movement
51 Property valuation movement (excluding investment properties under construction) Property Valuation Movement 2,400 2,200 229.8 2,000 16.5 132.1 4.8 15.7 1,800 1,600 1,400 1,200 2,271.1 1,000 1,881.8 800 600 400 200 0 Value at 31 Currency Additions Acquisition of Reclassifications Revaluation Valu
Slide 52: New, pipeline and extension stores
52 New, pipeline and extension stores Target Store FH/ LH Status MLA sq ft Other Opening New build. £170k pa of rental income prior to London- Lea Bridge FH Completed/ planning granted 76,500 Q1 2025 opening New build. Rental income receivable prior to London- Old Kent Road FH Completed/ subject to
Slide 53: Development characteristics
53 Development characteristics Limited site High land Planning Long lead- availability price restrictions time London / SE ✓ ✓ ✓ ✓ Regional City Centres ✓ ✓ ✓ Secondary towns ✓ ✓ ✓ Central Paris ✓ ✓ ✓ ✓ Paris 2nd belt ✓ ✓ ✓ Barcelona ✓ ✓ ✓ ✓ Amsterdam ✓ ✓ ✓ ✓ Brussels ✓ ✓ ✓ ✓ • Six largest UK operat
Slide 54: Very strong position in the best European markets for storage
54 Very strong position in the best European Very strong position in the two best European markets for storage markets for storage Metropolitan GDP (£'bil) Population GDP (£'bil) Population GDP (£'bil) Population area (mil) (mil) (mil) London 587 14.3 Ruhr 123 5.1 Brussels 102 2.5 Paris 526 12.2 Bar
Slide 55: Une Pièce en Plus – strong market characteristics
55 Une Pièce en Plus – strong market characteristics Density of population Density of storage per square mile supply per inhab. 60,000 1.2 50,000 1 40,000 0.8 30,000 0.6 20,000 0.4 10,000 0.2 0 0 Paris London Paris London
Slide 56: Leading market positions in key UK regional conurbations
56 Leading market positions in key UK regional conurbations Data supplied by the UK Self Storage Association - 2015 Safestore also has strong market positions in Newcastle (Pop. Den. 6,343) and Stockport (Pop. Den. 11,937)
Slide 57: Paris Development Characteristics
57 Paris Development Characteristics Paris • Paris planning now prohibits mixed use with warehousing • Potential available sites reserved for social housing • First belt town reluctance to accept self storage London • Price of land • Long lead-time to open a store • Limited site availability
Slide 58: French Commercial Lease Statute Provides Security of Tenure
58 French Commercial Lease Statute Provides Security of Tenure French commercial lease laws highly protective: • Right of renewal • Rent increase normally based on state construction cost index • Compensation for any loss arising in case of Landlord's refusal to renew – equivalent to full business v
Slide 59: Portfolio summary split geographically
59 Portfolio summary split geographically London & Rest of UK UK Paris Spain Benelux * Group South East Number of stores 72 58 130 29 4 15 178 Let Square Feet (m sq ft) 2.364 2.185 4.549 1.098 0.094 0.445 6.186 Maximum Lettable Area (m sq ft) 2.900 2.700 5.600 1.360 0.110 0.600 7.670 Let Square Feet
Slide 60: Portfolio summary split between freehold and leasehold
60 Portfolio summary split between freehold and leasehold HY 2022 HY 2021 Freehold Leasehold Total Freehold Leasehold Total Number of stores 126 52 178 111 50 161 MLA self storage only (m) 5.670 1.997 7.667 5.060 1.924 6.984 Closing occupancy (m) 4.533 1.652 6.186 3.997 1.623 5.620 Occupancy (%) 80.
Slide 61: Portfolio summary split between freehold and leasehold (LFL CER)
61 Portfolio summary split between freehold and leasehold (LFL CER) HY 2022 HY 2021 Freehold Leasehold Total Freehold Leasehold Total Number of stores 108 50 158 108 50 158 MLA self storage only (m) 4.938 1.932 6.870 4.907 1.924 6.830 Closing occupancy (m) 4.028 1.628 5.656 3.965 1.631 5.596 Occupan
Slide 62: Portfolio summary split by maturity
62 Portfolio summary split by maturity HY 2022 HY 2021 Developing Established Mature Total Developing Established Mature Total Number of stores 15 9 154 178 12 8 141 161 MLA self storage only (m) 0.676 0.479 6.512 7.667 0.549 0.395 6.040 6.984 Closing occupancy (m) 0.427 0.363 5.396 6.186 0.295 0.33
Slide 63: Portfolio summary split by maturity (LFL CER)
63 Portfolio summary split by maturity (LFL CER) HY 2022 HY 2021 Developing Established Mature Total Developing Established Mature Total Number of stores 10 8 140 158 10 8 140 158 MLA self storage only (m) 0.440 0.403 6.027 6.870 0.440 0.395 5.996 6.830 Closing occupancy (m) 0.337 0.332 4.987 5.656
Slide 64: Safestore UK historic performance
64 Safestore UK historic performance Sq Ft Occupied (m) Revenue (£m) 4.9 160 4.4 140 120 3.9 100 3.4 80 2.9 60 2.4 40 20 1.9 0 1.4 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 H1 H2 Rate (£) EBITDA (£m) 31 100 90 29
Slide 65: Customer length of stay
65 Customer length of stay UK Paris Spain Group HY 2022 HY 2021 HY 2022 HY 2021 HY 2022 HY 2021 HY 2022 HY 2021 (mths) (mths) (mths) (mths) (mths) (mths) (mths) (mths) Business Existing 27.2 29.8 31.7 32.6 28.0 22.7 28.3 30.3 Vacated 12.7 12.5 14.3 14.3 15.1 17.8 12.9 12.7 Total 13.8 13.9 16.3 16.2
Slide 66: Group customer split as at 30 Apr 2022
66 Group customer split as at 30 Apr 2022 Share of Customers Share of Occupancy 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 60% 79% 79% 60% 50% 50% 40% 40% 30% 30% 20% 20% 40% 40% 10% 21% 21% 10% 0% 0% HY 21 HY 22 HY 21 HY 22 Business Personal Business Personal
Slide 67: Personal and business customers as at 30 Apr 2022
67 Personal and business customers as at 30 Apr 2022 Personal and Business UK Paris Spain Benelux Customers Personal Customers Numbers (% of total) 76% 82% 88% 84% Square feet occupied (% of 57% 65% 82% 76% total) Average length of stay 18.7 29.4 23.4 27.8 (months) Business Customers Numbers (% of t