Safestore Holdings Plc · LSE:SAFE
Safestore — FY2020 Earnings Presentation
69 slides from Safestore's earnings presentation, Jan 14, 2021
Slide 1: Full Year Results Presentation 14 January 2021
Full Year Results Presentation 14 January 2021
Slide 2: Introduction
Bedford Store Introduction Frederic Vecchioli
Slide 3: Strong record of value creation
Strong record of value creation +8% CAGR +9% CAGR +16% CAGR +18% CAGR EBITDA and EPRA EPS adjusted for historic share based payment charges and current dilutive shares
Slide 4: Highlights
4 Highlights Covid-19 • Health, safety and well-being of our employees and customers of paramount importance • No UK employees furloughed and no plans to access UK Covid-19 related government funding • Full operations continued throughout pandemic, except with some restrictions in Mar/Apr lockdown S
Slide 5: Highlights
5 Highlights Operational delivery • Like-for-like CER Revenue up 3.4% • Like-for-like average occupancy for the period up 2.3% • Like-for-like average storage rate for the period up 2.0% in CER • Like-for-like closing occupancy of 80.8% (up 3.2ppts on 2019): • UK up 4.2ppts at 81.0% • FR down 0.6ppt
Slide 6: Financials
Carshalton store 6 Financials Andy Jones Frederic Vecchioli
Slide 7: Financial highlights
7 Financial highlights Change vs Income Statement & Cash flow FY 2020 FY 2019 Absolute CER² Revenue (£’m) like-for-like1 156.4 3.4% 3.4% Underlying EBITDA (£’m) like-for-like1 91.8 4.4% 4.4% Revenue (£’m) 162.3 6.9% 7.0% Underlying EBITDA (£’m) 93.9 7.3% 7.4% 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 2.04 1.82 3.86 0.99 4.85 Average Occupancy LFL1 (sq ft ‘m) YoY 3.0% 2.2% 2.7% 1.0% 2.3% Act 81.6% 80.3% 81.0% 80.1% 80.8% Closing Occupancy LFL1 % YoY 2.7ppts 5.7ppts 4.2ppts (0.6ppts) 3.2ppts Act 29.34
Slide 9: Group P&L
9 Group P&L FY 2020 FY 2019 UK Paris Spain Total UK Paris Spain Total (£'m) (€'m) (€'m) (£'m CER) (£'m) (€'m) (€'m) (£'m CER) Revenue 121.3 44.1 2.5 162.4 114.7 42.1 151.8 Underlying Cost of Sales (44.3) (11.8) (0.5) (55.1) (41.7) (11.8) (52.0) Store EBITDA 77.0 32.3 2.0 107.3 73.0 30.3 99.8 Store E
Slide 10: Revenue increase drives improved EBITDA (after leasehold rent)
10 Revenue increase drives improved EBITDA (after leasehold rent) Facilities & rates: (1.3) Volume related: (0.5) Enquiry generation: 0.6 New stores: (1.9) CER 6.2% improvement Figures above excludes share of associate EBITDA
Slide 11: Strong cash conversion
11 Strong cash conversion FY 2020 FY 2019 (£'m) (£'m) Underlying EBITDA 93.9 87.5 Working Capital/ Exceptionals/ Other 1.9 (0.9) Adjusted operating cash inflow 95.8 86.6 Interest payments (8.9) (8.8) Leasehold rent payments (12.8) (11.3) Tax payments (5.3) (5.3) Free cash flow (before investing and
Slide 12: Strong and flexible Balance Sheet
12 Strong and flexible Balance Sheet Capital Structure Oct 20 Oct 19 Variance Property valuation (£’m)* 1,571.5 1,345.7 16.8% UK (£’m)* 1,146.9 1,012.8 13.2% FR (€’m)* 447.9 386.1 16.0% Gross Debt (£’m) 454.5 413.0 £41.5m Net Debt (£’m) 434.9 379.8 £55.1m Group LTV 28.9% 30.7% (1.8ppts) Interest Cov
Slide 13: UK revenue collection un-impacted by Covid-19
13 UK revenue collection un-impacted by Covid-19 • Above chart shows the percentage of customer rent due that was collected within the period +30days. • In the period March to November 2020 97.7% of revenue was collected (97.7% in 2019) • In Dec-20 79.1% of revenue was collected within the period, c
Slide 14: Paris revenue collection un-impacted by Covid-19
14 Paris revenue collection un-impacted by Covid-19 • Above chart shows the percentage of customer rent due that was collected within the period +30days. • In the period March to November 2020 85.9% of revenue was collected (83.9% in 2019) • In Dec-20 75.1% of revenue was collected within the period
Slide 15: Strong store margin progression over last 7 years
15 Strong store margin progression over last 7 years Growth over the last 7 years: • Revenue +44.9% • Store EBITDA Margin % +9.3% CAGR over the last 7 years: • Revenue +5.4% • Store EBITDA Margin % +1.3%
Slide 16: Guidance – non trading and one-off items
16 Guidance – non trading and one-off items Item Guidance Foreign exchange impact Slight weakening of the Euro (1.136 in FY2020, 1.133 in FY19) had no material impact on EBITDA after leasehold costs In the year, each 10c fluctuation from the FY2020 FX rate of 1.136 would equate to c. £1.7m of Group
Slide 17: Operational Delivery
Peterborough store 17 Operational Delivery Frederic Vecchioli
Slide 18: Safestore Unique Proposition
18 Safestore Unique Proposition Scale • Leading digital marketing provides more enquiries at lower cost • IT systems provide robust and detailed data capture to feed marketing and pricing algorithms • Volume of data allows for informed investment and pricing decisions Operational focus - trading del
Slide 19: Benefits of scale
19 Benefits of scale Leading and scalable digital platform benefits all territories • Enquiry growth +19.0% • All geographies moved onto same web platform, data systems and algorithms • Multi-country and multi-brand systems • Improvement in advertising targeting logic developed in the UK rolled out
Slide 20: Covid-19 – Seasonal shift
20 Covid-19 – Seasonal shift • March to June 2020 new lets and vacates heavily disrupted • Strong trading before and after first lockdown • Strong November/December 2020 trading • Covid-19 resulted in a shift of the normal seasonal peak from summer to year end • Higher than usual vacates level expec
Slide 21: Strong early trading
21 Strong early trading FY 2021 starting at record Group occupancy level Strong early FY 2021 trading for December & November • Group LFL Closing occupancy at 5.3m sq ft and 80.3% up 8.6% on prior year • Group Closing occupancy at 5.5m sq ft and 79.8% up 11.6% on prior year • Group Total Revenue up
Slide 22: Operational focus
22 Operational focus Balanced occupancy and rate growth management Like-for-like¹ UK Paris Rate per Sq Closing Sq Ft Revenue in Rate per Sq Closing Sq Ft Revenue in Ft Let CER² 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%
Slide 23: Continued trading delivery and MLA extension
23 Continued trading delivery and MLA extension 1.4m sq ft available plus 0.2m sq ft pipeline, extensions
Slide 24: Continued trading delivery and MLA extension
24 Continued trading delivery and MLA extension Stores opened since Oct 13 82.6% 63.1% Stores opened at Oct 13 Same Store 2013 2014 2015 2016 2017 2018 2019 2020 Avg. Rate (CER) £24.95 £24.98 £26.26 £27.21 £27.52 £27.62 £27.79 £28.35 Average Rate (CER) YoY 0.1% 5.1% 3.6% 1.1% 0.4% 0.6% 2.0% + 2.5m s
Slide 25: Further growth opportunities
25 Further growth opportunities Continue to optimize existing portfolio • 1.41 m sq ft available – since 2013 occupancy CAGR of 7.4% • Rate management – since 2013 rate CAGR of 1.1% • Focus on core UK/Paris markets New geographies approach: • 3 new geographies successfully integrated within 12 month
Slide 26: Portfolio development
26 Portfolio development Pipeline since 2016: MLA Occupancy at purchase FY of purchase / opening Space Maker (12 Stores) 496,000 327,360 2016 London Wandsworth 33,200 0 2016 Birmingham Central 51,000 0 2016 Altrincham 43,500 0 2016 Paris Emerainville 60,000 0 2016 Alligator (12 Stores) 569,000 398,3
Slide 27: Further growth opportunities
27 Further growth opportunities As at 31 Oct 2020 Group London UK Paris Spain & SE Regions Current Maximum lettable area (m sq ft) 6.86 2.77 2.67 1.31 0.11 Let Square Feet (m sq ft) 5.45 2.24 2.08 1.03 0.10 Current Available space (m sq ft) 1.41 0.53 0.59 0.28 0.01 Pipeline / Extensions Maximum lett
Slide 28: Flexible investment model
28 Flexible investment model UK Lease regears – demonstrable track record • c. 63% of UK leases regeared since 2012 • Leases regeared: Notting Hill • All leases in England within renewal protection rights of the Landlord and Tenant Protection Act FR lease regularly renewed • “Commercial Property” ow
Slide 29: Total Shareholder Return
29 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 & Citi. FTSE350 Real Estate is the FTSE350 Real Estate Super Sector index
Slide 30: Well positioned for further growth
30 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 • 71% of revenue from London / South East and Paris • Unlet invested space equivalent to around 37 stores incl
Slide 31: Appendices
31 Appendices
Slide 32: Index
32 Index: CSR 55 Pipeline stores 33 Sustainability 56 Development characteristics 57 London and Paris market position Financial 59 UK regional market position 37 Detailed P&L 60 Paris development characteristics 38 Non-underlying items 61 French leases 39 Detailed Balance Sheet 40 Underlying to Stat
Slide 33: Sustainability @ Safestore
33 Sustainability @ Safestore
Slide 34: We have aligned to relevant Sustainable Development Goals
34 We have aligned to relevant Sustainable Development Goals
Slide 35: Sustainability Targets and KPIs
35 Sustainability Targets and KPIs
Slide 36: Significant progress on GHG
36 Significant progress on GHG Total GHG 47% below 2013 baseline despite Intensity of GHG emission 60% below 2013 level portfolio growth (newer stores, energy mix, efficiency initiatives) -13.2% -16.9% YoY YoY Baseline year Baseline year
Slide 37: Detailed P&L
37 Detailed P&L Group FY 2020 FY 2019 £’m £’m Revenue 162.3 151.8 Cost of sales (56.3) (53.8) Gross profit 106.0 98.0 Administrative expenses (20.3) (18.5) Underlying EBITDA * 93.9 87.5 Exceptional Items (0.2) (0.6) Depreciation and contingent rent (1.2) (1.8) Share based payments (6.5) (5.6) Share
Slide 38: Non-underlying items
38 Non-underlying items FY 2020 FY 2019 (£'m) (£'m) Underlying EBITDA 93.9 87.5 Gain on investment properties and investment properties under construction 126.5 84.2 Depreciation (0.9) (0.7) Variable lease payments (0.3) (1.1) Share-based payments (6.5) (5.6) Exceptional items (0.2) (0.6) Share of a
Slide 39: Detailed Balance Sheet
39 Detailed Balance Sheet Group FY 2020 FY 2019 £’m £’m Assets Non-current assets Investment properties 1,557.5 1,331.8 Investment properties under construction 14.0 13.9 Other non-current assets 86.1 69.2 Non-current assets 1,657.6 1,414.9 Current assets 43.5 56.1 Liabilities Current liabilities (5
Slide 40: FY 2020 Underlying to Statutory adjustments
40 FY 2020 Underlying to Statutory adjustments Var. lease Share Deferred Underlying Share based Derivative Valuation Lease Dep'n LH Exchange Underlying Headings Exceptionals Pay'ts/ of Tax Statutory Statutory Headings P&L Payments Movements Movement Liab Int Properties adjustments Dep'n Assoc Charge
Slide 41: FY 2019 Underlying to Statutory adjustments
41 FY 2019 Underlying to Statutory adjustments Contingent Underlying Share based Derivative Valuation Finance Dep'n LH Tax / CGS / Underlying Headings Exceptionals Rent / Statutory Statutory Headings P&L payments Movements Movement Lease Int properties FX Dep’n Sales 151.8 151.8 Revenue Costs (52.0)
Slide 42: Movement in Cost Base
42 Movement in Cost Base Cost of Sales Administrative Expenses FY 2020 FY 2019 FY 2020 FY 2019 (£'m) (£'m) (£'m) (£'m) Reported cost of sales (56.3) (53.8) Reported administrative expenses (20.3) (18.5) Adjusted for: Adjusted for: Depreciation 0.9 0.7 Exceptional items & share-based payments 6.7 6.2
Slide 43: Group Banking Covenants
43 Group Banking Covenants – Oct 2020 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 44: Group Debt position at 31 Oct 2020
44 Group Debt position at 31 Oct 2020 Term Facility Drawn Hedged Hedged Bank Hedged Floating Total £/€/'m £'m £'m % Margin Rate Rate Rate UK Revolver Jun 22/Jun 23 £ 250.0 138.0 55.0 40% 1.25% 0.82% 0.04% 1.60% UK Revolver - non-utilisation £ 112.0 - - - 0.50% - - 0.50% Euro Revolver Jun22/Jun 23 €
Slide 45: Hedging of Euro Earnings – FX Forwards
45 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 46: Diversified drivers and business geography generate resilient revenue and profits
46 Diversified drivers and business geography generate resilient revenue and profits c. 8% - 13% owner occupier 2015 2016 2017 2018 2019 2020 Personal Customers Numbers (% of total) 74% 75% 75% 76% 77% 78% Square feet occupied (% of total) 53% 54% 55% 56% 58% 59% Square feet occupied (‘m) 1.88 2.05
Slide 47: Revenue predictability and resilience
47 Revenue predictability and resilience Store square feet occupancy- split by year of customer move-in date: • 78% of FY 2020 revenue from Customers that moved-in before 31/10/2019 • Typically the customers moved in during the year make up 40% to 50% of the year end occupancy, but only between 20%
Slide 48: Safestore UK historic performance
48 Safestore UK historic performance EBITDA in 2017 and 2018 has been adjusted for Share based payment charge
Slide 49: National Accounts and Customer Support Centre
49 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 12% of all enquiries • Supports the sales teams in store
Slide 50: Portfolio strength with further potential
50 Portfolio strength with further potential • 159 store portfolio (As at Oct 20) • 6.9m maximum lettable area • 1.4m sq ft available – 0.8m London, South East and Paris UK (127 stores) • 48 stores within the M25 • 28 stores in Paris • 23 stores in the South East • 56 stores in the UK regions Paris
Slide 51: Densest network of stores in London and Paris
Densest network of stores in 51 London and Paris Paris and London combined represent 76 stores – £93.9m of Revenue, £64.3m of Store EBITDA
Slide 52: Paris unique competitive market position
52 Paris unique competitive market position Very solid market fundamentals: • 22 years of uninterrupted growth • Closing occupancy up 1.9% • 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 53: Limited UK Supply
53 Limited UK Supply Growing and fragmented industry: • 1,900 self storage sites (of which 563 are container sites) – 972 storage businesses • Fragmented market with the six largest operators only owning 352 UK stores (127 stores) • c. 44 new stores per annum expected in 2020 - 2021 Immature industr
Slide 54: Property valuation movement
54 Property valuation movement (excluding investment properties under construction) Key assumptions Oct 2020 Apr 2020* Oct 2019 Average Self Storage rate per sq ft £26.44 £26.52 £26.09 Exit Cap rate (Freehold only) 6.4% 6.6% 6.6% Weighted average stabilised occupancy 87.1% 84.8% 86.2% Average number
Slide 55: New, pipeline and extension stores
55 New, pipeline and extension stores Total MLA Pipeline store / site Estimated opening sq ft Development stores acquired / under contract London Paddington Park West Place 13,000 2023 Birmingham Middleway 58,500 2021 Paris Magenta 50,000 2021 Southend extension 8,600 2021 Total sq ft in pipeline 13
Slide 56: Development characteristics
56 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 23% of market* • Only
Slide 57: Very strong position in the best European markets for storage
57 Very Very strong strong positionposition inEuropean in the two best the bestmarkets 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 Barcel
Slide 58: Une Pièce en Plus – strong market characteristics
58 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 59: Leading market positions in key UK regional conurbations
59 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 60: Paris development characteristics
60 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 61: French Commercial Lease Statute provides security of tenure
61 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 62: Portfolio summary split geographically
62 Portfolio summary split geographically London & Rest of UK UK Paris Spain Group South East Number of stores 71 56 127 28 4 159 Let Square Feet (m sq ft) 2.24 2.08 4.32 1.03 0.10 5.45 Maximum Lettable Area (m sq ft) 2.77 2.67 5.44 1.31 0.11 6.86 Let Square Feet per store (k sq ft) 32 37 34 37 24 3
Slide 63: Portfolio summary split between freehold and leasehold
63 Portfolio summary split between freehold and leasehold FY 2020 FY 2019 UK Paris Spain Group UK Paris Spain Group FreeholdLeasehold FreeholdLeasehold FreeholdLeasehold Freehold Leasehold FreeholdLeasehold FreeholdLeasehold FreeholdLeasehold FreeholdLeasehold Number of stores 91 36 17 11 1 3 109 50
Slide 64: Portfolio summary split between freehold and leasehold (LFL CER)
64 Portfolio summary split between freehold and leasehold (LFL CER) FY 2020 FY 2019 UK Paris Spain Group UK Paris Spain Group FreeholdLeasehold FreeholdLeasehold FreeholdLeasehold FreeholdLeasehold FreeholdLeasehold FreeholdLeasehold FreeholdLeasehold FreeholdLeasehold Number of stores 84 35 16 11 0
Slide 65: Portfolio summary split by maturity
65 Portfolio summary split by maturity FY 2020 FY 2019 Developing Established Mature Total Developing Established Mature Total Number of stores 12 6 141 159 9 4 137 150 MLA self storage only (m) 0.527 0.304 6.031 6.862 0.404 0.170 5.894 6.468 Closing occupancy (m) 0.286 0.248 4.905 5.439 0.206 0.131
Slide 66: Portfolio summary split by maturity (LFL CER)
66 Portfolio summary split by maturity (LFL CER) FY 2020 FY 2019 Developing Established Mature Total Developing Established Mature Total Number of stores 3 6 137 146 3 6 137 146 MLA self storage only (m) 0.171 0.304 5.924 6.399 0.305 0.170 5.893 6.368 Closing occupancy (m) 0.098 0.248 4.811 5.157 0.
Slide 67: Customer length of stay
67 Customer length of stay UK Paris Group FY 2020 FY 2019 FY 2020 FY 2019 FY 2020 FY 2019 (mths) (mths) (mths) (mths) (mths) (mths) Business Existing 29.9 30.1 34.7 33.3 30.7 30.7 Vacated 12.4 12.5 14.1 13.7 12.7 12.7 Total 13.9 14.4 16.3 16.0 14.2 14.7 Personal Existing 19.8 19.8 27.7 26.3 21.9 21.
Slide 68: Group customer split as at 31 Oct 2020
68 Group customer split as at 31 Oct 2020
Slide 69: Personal and business customers as at 31 Oct 2020
69 Personal and business customers as at 31 Oct 2020 Personal and Business Customers UK Paris Personal Customers Numbers (% of total) 76% 84% Square feet occupied (% of total) 57% 69% Average length of stay (months) 19.8 27.7 Business Customers Numbers (% of total) 24% 16% Square feet occupied (% of