Safestore Holdings Plc · LSE:SAFE
Safestore — FY2019 Earnings Presentation
61 slides from Safestore's earnings presentation, Jan 7, 2020
Slide 1: Full Year Results Presentation 7 Jan 2020
11 Full Year Results Presentation 7 Jan 2020
Slide 2: Introduction
Merry hill Store Introduction Frederic Vecchioli Frederic Vecchioli
Slide 3: Strong record of value creation
Strong record of value creation +58% +68% +166% +204% EBITDA and EPRA EPS adjusted for historic share based payment charges and current dilutive shares
Slide 4: Highlights
4 Highlights Robust Financial Performance • Group LFL revenue up 4.8% in CER • Underlying EBITDA up 5.4% in CER • Adjusted Diluted EPRA EPS up 6.3% at 28.5p • 7.7% increase in the full year dividend to 17.5p (FY18: 16.25) Operational Focus Continued balanced approach to revenue management drives ret
Slide 5: Highlights
5 Highlights Strategic Progress UK: • Acquisition of Fort Box Self-Storage (two London stores) on 5 November 2019 • Acquisition of 34,000 sq ft freehold Heathrow store for £6.6m including acquisition costs • Freehold site acquired in Sheffield with 47,000 sq ft store to open in H1 2020 • New long le
Slide 6: Financials
Newcastle Central Store Financials Andy AndyJones Jones
Slide 7: Financial highlights
7 Financial highlights Change vs Income Statement & Cash flow FY 2019 FY 2018 Absolute CER² Revenue (£’m) like-for-like1 149.2 4.8% 4.8% Underlying EBITDA (£’m) like-for-like1 87.1 6.0% 6.0% Revenue (£’m) 151.8 5.5% 5.6% Underlying EBITDA (£’m) 87.5 5.5% 5.4% Underlying EBITDA (post leasehold costs)
Slide 8: Solid revenue growth across the portfolio
8 Solid revenue growth across the portfolio London / Rest of UK Total Paris Group SE UK Total Act 1.94 1.80 3.74 0.96 4.70 Average Occupancy LFL1 (sq ft ‘m) YoY 2.1% 4.0% 3.0% 5.5% 3.5% Act 79.5% 74.6% 77.1% 84.4% 78.5% Closing Occupancy LFL1 % YoY 3.6ppts 3.2ppts 3.5ppts 3.2ppts 3.4ppts Act 28.72 1
Slide 9: Group P&L
9 Group P&L FY 2019 FY 2018 UK Paris Total UK Paris Total (£'m) (€'m) (£'m CER) (£'m) (€'m) (£'m CER) Revenue 114.7 42.1 151.9 109.0 39.4 143.9 Underlying Cost of Sales (41.7) (11.8) (52.1) (39.6) (11.3) (49.6) Store EBITDA 73.0 30.3 99.8 69.4 28.1 94.3 Store EBITDA Margin 63.6% 72.0% 65.7% 63.7% 71
Slide 10: Revenue increase drives improved EBITDA (after leasehold rent)
10 Revenue increase drives improved EBITDA (after leasehold rent) Facilities & rates: 0.7 Volume related: 0.5 Other: 0.4 New stores: 0.9 CER 6.1% improvement
Slide 11: Strong cash conversion
11 Strong cash conversion FY 2019 FY 2018 (£'m) (£'m) Underlying EBITDA 87.5 82.9 Working Capital/ Exceptionals/ Other (0.9) (1.2) Adjusted operating cash inflow 86.6 81.7 Interest payments (8.8) (8.7) Leasehold rent payments (11.3) (11.2) Tax payments (5.3) (6.4) Free cash flow (before investing an
Slide 12: Strong and flexible Balance Sheet
12 Strong and flexible Balance Sheet Capital Structure Oct 19 Oct 18 Variance Property valuation (£’m)* 1,345.7 1,220.9 10.2% UK (£’m)* 1,012.8 921.1 10.0% FR (€’m)* 386.1 337.2 14.5% Gross Debt (£’m) 413.0 369.9 £43.1m Net Debt (£’m) 379.8 359.4 £20.4m Group LTV 30.7% 30.3% 0.4ppts Interest Cover R
Slide 13: Guidance – non trading and one-off items
13 Guidance – non trading and one-off items Item Guidance Foreign exchange impact Slight weakening of the Euro (1.133 in FY2019, 1.1311 in FY2018) had no material impact on EBITDA after leasehold rent In the year, each 10c fluctuation from the FY2019 FX rate of 1.13 would equate to c. £1.5m of Group
Slide 14: Frederic Vecchioli
London Chiswick Store bb: i. fi Frederic Vecchioli
Slide 15: Operations overview
15 Operations overview Record occupancy and new let growth in FY 2019 driven by increased conversion and enquiry growth • Efficient marketing platform drives better targeted enquiries – enquiry growth +3.9% • 264,000 sqft added in the financial year excluding acquisitions • Continued investment in p
Slide 16: Leveraging leading marketing platform
16 Leveraging leading marketing platform Marketing efficiency increased further • Enquiry growth +3.9% • Focus on targeted and quality enquiries • Group new let growth +6.9% • UK: +6.4% • FR: +9.2% Group marketing budget at 5.2% of revenue (PY 5.4%) • Improving our advertising targeting logic drives
Slide 17: Pricing
17 Pricing Rate growth (CER) impacted by new stores and acquisitions: • 1.1% in the UK • 1.4% like-for-like • (1.3%) in Paris • (0.6%) like-for-like • Paris rate impacted by recently opened stores, without this the pre 2016 LFL store rate would be +1.0% Balanced Revenue Management approach – focus o
Slide 18: Occupancy and MLA
18 Occupancy and MLA 1.5m sq ft available plus 0.23m sq ft pipeline, extensions and post year end acquisitions Pipeline excludes development sites in Morden and Bermondsey
Slide 19: Like-for-like group performance last six years
19 Like-for-like group performance last six years Last 6 years: Occupancy: +27% Rate: +11% Average store size = 43k sq ft • More central locations • Greater barriers to entry • Delivers higher rate per sq ft • Easier to grow to 90%+ occupancy All stores already open at October 2013 at the start of n
Slide 20: Balanced occupancy and rate management
20 Balanced occupancy and rate management Like-for-like¹ UK Paris Rate per Closing Sq Revenue in Rate per Sq Closing Sq Revenue in Sq Ft Ft Let CER² Ft Ft Let CER² % YoY % YoY % YoY % YoY % YoY % YoY 2017 Q1 2.2% 2.7% 4.9% 4.5% 1.3% 4.6% 2017 Q2 1.2% 1.1% 3.0% 0.9% 2.5% 1.7% 2017 Q3 0.0% 1.1% 2.3% 2
Slide 21: 1.5m square feet fully invested available
21 1.5m square feet fully invested available – equivalent of around 35 new stores As at 31 Oct 2019 Group London UK Paris Spain & SE Regions Current Maximum lettable area (m sq ft) 6.47 2.67 2.49 1.31 0.00 Let Square Feet (m sq ft) 4.98 2.10 1.86 1.02 0.00 Current Available space (m sq ft) 1.49 0.57
Slide 22: Selectively leveraging platform in other key urban areas
22 Selectively leveraging platform in other key urban areas Strategic approach: • Provides non-dilutive growth options • Widens long term opportunities in key European markets and capital cities • Replication of very successful Paris platform • Leverage Safestore platform and best in class operation
Slide 23: Key urban areas developments
23 Key urban areas developments M3 Self Storage (Netherlands): Joint venture with Carlyle: • Six prime storage locations in Amsterdam and Haarlem (MLA - 277,000 sq ft) • Extending Safestore’s operational platform: • Stores integrated and to be rebranded • Portfolio will benefit from Safestore’s mark
Slide 24: Development
24 Development Pipeline since 2016: MLA Occupancy at FY of purchase purchase / opening Space Maker (12 Stores) 496,000 327,360 2016 London Wandsworth 33,200 0 2016 Total pipeline investment Birmingham Central 51,000 0 2016 since 2016 Altrincham 43,500 0 2016 • Recent average cost per Paris Emerainvi
Slide 25: Flexible investment model
25 Flexible investment model UK Lease regears – demonstrable track record • c. 60% of UK leases regeared since 2012 • Leases regeared: Edinburgh Gyle, Portsmouth Fratton and Edinburgh Ford Kinnaird • All leases in England within renewal protection rights of the Landlord and Tenant Protection Act FR
Slide 26: Total Shareholder Return
26 Total Shareholder Return Over both periods, Safestore has provided the highest returns of all stocks in the FTSE350 Real Estate Super Sector index Data supplied by PWC & Investec. FTSE350 Real Estate is the FTSE350 Real Estate Super Sector index
Slide 27: Well positioned for further growth
27 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 • 72% of revenue from London / South East and Paris • Unlet invested space equivalent to around 40 stores incl
Slide 28: Appendices
28 Appendices
Slide 29: Index
29 Index: Financial 30 Detailed P&L Portfolio summary: 31 Non-underlying items 53 Geographic 32 Detailed Balance Sheet 54 Freehold / Leasehold 33 Underlying to Statutory Adjustments 55 Freehold / Leasehold (LFL CER) 35 Movement in Cost Base 56 Maturity 36 Group Banking Covenants 57 Maturity (LFL CER
Slide 30: Detailed P&L
30 Detailed P&L Group FY 2019 FY 2018 £’m £’m Revenue 151.8 143.9 Cost of sales (53.8) (51.7) Gross profit 98.0 92.2 Administrative expenses (18.5) (16.7) Underlying EBITDA * 87.5 82.9 Exceptional Items (0.6) - Depreciation and contingent rent (1.8) (2.1) Share based payments (5.6) (5.3) Operating p
Slide 31: Non-underlying items
31 Non-underlying items FY 2019 FY 2018 (£'m) (£'m) Underlying EBITDA 87.5 82.9 Gain on investment properties 84.2 122.1 Depreciation (0.7) (0.6) Contingent rent (1.1) (1.5) Share-based payments (5.6) (5.3) Exceptional items (0.6) - Statutory Operating Profit 163.7 197.6
Slide 32: Detailed Balance Sheet
32 Detailed Balance Sheet Group FY 2019 FY 2018 £’m £’m Assets Non-current assets Investment properties 1,331.8 1,216.2 Investment properties under construction 13.9 4.7 Other non-current assets 69.2 60.4 Non-current assets 1,414.9 1,281.3 Current assets 56.1 33.2 Liabilities Current liabilities (53
Slide 33: FY 2019 Underlying to Statutory adjustments
33 FY 2019 Underlying to Statutory adjustments Tax / Underlying Share based Derivative Contingent Valuation Finance Dep'n LH Statutory Underlying Headings Exceptionals CGS / Statutory Headings P&L payments Movements Rent / Dep'n Movement Lease Int properties P&L FX Sales 151.8 151.8 Revenue Cost of
Slide 34: FY 2018 Underlying to Statutory adjustments
34 FY 2018 Underlying to Statutory adjustments Tax / Underlying Share based Derivative Contingent Valuation Finance Dep'n LH Statutory Underlying Headings Exceptionals CGS / Statutory Headings P&L payments Movements Rent / Dep'n Movement Lease Int properties P&L FX Sales 143.9 143.9 Revenue Cost of
Slide 35: Movement in Cost Base
35 Movement in Cost Base Cost of Sales Administrative Expenses FY 2019 FY 2018 FY 2019 FY 2018 (£'m) (£'m) (£'m) (£'m) Reported cost of sales (53.8) (51.7) Reported administrative expenses (18.5) (16.7) Adjusted for: Adjusted for: Depreciation 0.7 0.6 Share based payments 5.6 5.3 Contingent rent 1.1
Slide 36: Group Banking Covenants
36 Group Banking Covenants – Oct 2019 reported 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 37: Group Debt position at 31 Oct 2019
37 Group Debt position at 31 Oct 2019 Term Facility Drawn Hedged Hedged Bank Hedged Floating Total £/€/'m £'m £'m % Margin Rate Rate Rate UK Revolver Jun 22/Jun 23 £ 250 97.0 55.0 57% 1.25% 0.82% 0.77% 2.05% UK Revolver - non-utilisation £ 153.0 - - - 0.50% - - 0.50% Euro Revolver Jun22/Jun 23 € 70.
Slide 38: Revenue predictability and resilience
38 Revenue predictability and resilience Store square feet occupancy- split by year of customer move-in date: To BE UPDATED • Typically the customers moved in during the year make up 40% to 50% of the year end occupancy, but only between 20% to 30% of revenue (due to the impact of the introductory o
Slide 39: Diversified drivers and business geography generate resilient revenue and profits
39 Diversified drivers and business geography generate resilient revenue and profits c. 8% - 13% owner occupier Diversified business drivers, different business geographies and a stable average customer length of stay and unit mix provides resilient group profits. At the end of 2012, VAT was introdu
Slide 40: National Accounts and Customer Support Centre
40 National Accounts and Customer Support Centre National Accounts: • Leverage UK platform further and accounts for 13% of all occupancy in the UK • Two-thirds of customers outside London Customer Support Centre: • CSC handled 14% of all enquiries • Supports the sales teams in store
Slide 41: Portfolio strength with further potential
41 Portfolio strength with further potential • 150 store portfolio (As at Oct 19) • 6.5m maximum lettable area • 1.5m sq ft available – 0.9m London, South East and Paris • 45 stores within the M25 • 28 stores in Paris • 23 stores in the South East • 54 stores in the UK regions • New stores opened in
Slide 42: Densest network of stores in London and Paris
Densest network of stores in 42 London and Paris Paris and London combined represent 73 stores – £87.8m of Revenue, £60.3m of Store EBITDA
Slide 43: Paris unique competitive market position
43 Paris unique competitive market position Very solid market fundamentals: • 21 years of uninterrupted growth • Closing occupancy up 6.4% • Unique and densest network of stores in central Paris • Opportunity to leverage digital platform • Magenta to open 2021 (50,000 sq ft) • All new stores trading
Slide 44: Limited UK Supply
44 Limited UK Supply Growing and fragmented industry: • 1,500 self storage sites (of which 381 are container sites) – 765 storage businesses • Fragmented market with the six largest operators only owning 339 UK stores (122 stores) • c. 30 new stores per annum expected in 2018 - 2020 Immature industr
Slide 45: Property valuation movement
45 Property valuation movement (excluding investment properties under construction) Key assumptions Oct 2019 Apr 2019* Oct 2018 Average Self Storage rate per sq ft £26.09 £26.30 £25.90 Exit Cap rate (Freehold only) 6.6% 6.8% 6.7% Weighted average stabilised occupancy 86.2% 85.3% 85.3% Stabilised occ
Slide 46: New, pipeline and extention stores
46 New, pipeline and extention stores Total MLA Pipeline store / site Estimated opening sq ft Development stores acquired / under contract London Carshalton 40,000 2020 Sheffield 47,000 2020 Gateshead 38,000 2020 Paris Magenta 50,000 2021 Barking extension 5,000 2020 Bedford extension 26,000 2020 To
Slide 47: Development characteristics
47 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 • Ten largest UK operators own just 27% of market* • Only
Slide 48: Very strong position in the two best European markets for storage
48 Very Very strong strong positionposition inEuropean in the two best the two best markets for storage European 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 B
Slide 49: Une Pièce en Plus – strong market characteristics
49 Une Pièce en Plus – strong market characteristics Density of population Density of storage per square mile supply per inhab. 60000 1.2 50000 1 40000 0.8 30000 0.6 20000 0.4 10000 0.2 0 0 Paris London Paris London
Slide 50: Leading market positions in key UK regional conurbations
50 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 51: Paris development characteristics
51 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 52: French Commercial Lease Statute provides security of tenure
52 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 53: Portfolio summary split geographically
53 Portfolio summary split geographically London & Rest of UK UK Paris Group South East Number of stores 68 54 122 28 150 Let Square Feet (m sq ft) 2.10 1.86 3.96 1.02 4.98 Maximum Lettable Area (m sq ft) 2.67 2.49 5.16 1.31 6.47 Let Square Feet per store (k sq ft) 31 34 32 36 33 Average Store Capac
Slide 54: Portfolio summary split between freehold and leasehold
54 Portfolio summary split between freehold and leasehold FY 2019 FY 2018 UK Paris Group UK Paris Group Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Number of stores 86 36 17 11 103 47 83 36 16 11 99 47 MLA self-storage only (m) 3.
Slide 55: Portfolio summary split between freehold and leasehold (LFL CER)
55 Portfolio summary split between freehold and leasehold (LFL CER) FY 2019 FY 2018 UK Paris Group UK Paris Group Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Number of stores 82 35 15 11 97 46 82 35 15 11 97 46 MLA self-storage on
Slide 56: Portfolio summary split by maturity
56 Portfolio summary split by maturity FY 2019 FY 2018 Developing Established Mature Total Developing Established Mature Total Number of stores 9 4 137 150 4 5 137 146 MLA self storage only (m) 0.404 0.170 5.894 6.468 0.245 0.230 5.894 6.369 Closing occupancy (m) 0.206 0.131 4.626 4.963 0.065 0.154
Slide 57: Portfolio summary split by maturity (LFL CER)
57 Portfolio summary split by maturity (LFL CER) FY 2019 FY 2018 Developing Established Mature Total Developing Established Mature Total Number of stores 2 4 137 143 2 4 137 143 MLA self storage only (m) 0.134 0.170 5.894 6.198 0.074 0.230 5.894 6.198 Closing occupancy (m) 0.090 0.131 4.628 4.849 0.
Slide 58: Safestore UK historic performance
58 Safestore UK historic performance EBITDA in 2017 and 2018 has been adjusted for Share based payment charge
Slide 59: Customer length of stay
59 Customer length of stay UK Paris Group FY 2019 FY 2018 FY 2019 FY 2018 FY 2019 FY 2018 (mths) (mths) (mths) (mths) (mths) (mths) Business Existing 30.1 30.5 33.3 32.2 30.7 30.8 Vacated 12.5 12.5 13.7 13.4 12.7 12.7 Total 14.4 14.6 16.0 15.8 14.7 14.8 Personal Existing 19.8 20.2 26.3 26.4 21.7 21.
Slide 60: Group customer split as at 31 Oct 2019
60 Group customer split as at 31 Oct 2019
Slide 61: Personal and business customers as at 31 Oct 2019
61 Personal and business customers as at 31 Oct 2019 Personal and Business Customers UK Paris Personal Customers Numbers (% of total) 75% 84% Square feet occupied (% of total) 55% 68% Average length of stay (months) 19.8 26.3 Business Customers Numbers (% of total) 25% 16% Square feet occupied (% of