Safestore Holdings Plc · LSE:SAFE
Safestore — HY 2021 Earnings Presentation
68 slides from Safestore's earnings presentation, Jun 17, 2021
Slide 1: Half Year Presentation 17 June 2021
Half Year Presentation 17 June 2021
Slide 2: Introduction
Birmingham Middleway Store Introduction Frederic Vecchioli
Slide 3: Strong record of value creation
3 Strong record of value creation +88% +113% +202% +241% EBITDA and EPRA EPS adjusted for historic share based payment charges and current dilutive shares Above variances has not been fully adjusted for the impact of rounding
Slide 4: Safestore track record
4 Safestore track record Total Revenue Earnings per share £’m YoY CAGR YoY CAGR HY 2016 54.1 7.3% 9.0 28.6% HY 2017 62.6 15.7% 11% 10.4 15.6% 22% HY 2018 69.2 10.5% 11% 12.6 21.2% 22% HY 2019 73.1 5.6% 10% 13.5 7.1% 18% HY 2020 79.3 8.5% 9% 14.5 7.4% 16% HY 2021 88.1 11.1% 10% 18.1 24.8% 17% Revenue
Slide 5: HY 2021 – Continued business model delivery
5 HY 2021 – Continued business model delivery Operational focus: • Digital platform: • N° 1 UK online brand – Platform successfully rolled out into all markets delivering material efficiency • Enquiry growth +36.0% – Cost per enquiry down 25.9% – Group marketing cost 3.9% of revenue • Store team exc
Slide 6: Financials
Newcastle Central Store Financials Andy AndyJones Jones
Slide 7: Financial highlights
7 Financial highlights Change vs Income Statement & Cash flow HY 2021 HY 2020 Absolute CER² Revenue (£’m) like-for-like1 84.3 8.9% 8.3% Underlying EBITDA (£’m) like-for-like1 51.9 16.6% 15.9% Revenue (£’m) 88.1 11.1% 10.5% Underlying EBITDA (£’m) 54.4 18.5% 17.8% Underlying EBITDA (post leasehold co
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 Average Occupancy LFL1 Act 2.22 2.04 4.26 1.05 5.31 (sq ft ‘m) YoY 8.7% 16.2% 12.2% 4.9% 10.7% Act 82.5% 82.2% 82.4% 81.7% 82.3% Closing Occupancy LFL1 % YoY 9.0ppts 14.6ppts 11.8ppts 6.6ppts 10.8ppts Avera
Slide 9: Group P&L
9 Group P&L HY 2021 HY 2020 UK Paris Spain Total UK Paris Spain Total (£'m) (€'m) (€'m) (£'m CER) (£'m) (€'m) (€'m) (£'m CER) Revenue 67.2 22.1 1.6 87.6 59.8 21.8 1.0 79.3 Underlying Cost of Sales (21.8) (5.4) (0.3) (26.8) (21.6) (6.0) (0.2) (26.9) Store EBITDA 45.4 16.7 1.3 60.8 38.2 15.8 0.8 52.4
Slide 10: Revenue increase drives improved EBITDA (after leasehold rent)
10 Revenue increase drives improved EBITDA (after leasehold rent) CER 20.4% improvement Excludes £0.3m share of associate’s EBITDA
Slide 11: Strong cash conversion
11 Strong cash conversion HY 2021 HY 2020 (£'m) (£'m) Underlying EBITDA 54.4 45.9 Working Capital/ Exceptionals/ Other (0.3) - Adjusted operating cash inflow 54.1 45.9 Interest payments (4.6) (4.6) Leasehold rent payments (6.5) (6.3) Tax payments (2.7) (2.6) Free cash flow (before investing and fina
Slide 12: Strong and flexible Balance Sheet
12 Strong and flexible Balance Sheet Capital Structure Apr 21 Oct 20 Variance Apr 20 Property valuation (£’m)* 1,702.0 1,571.5 8.3% 1,466.8 UK (£’m)* 1,265.9 1,146.9 10.4% 1,087.8 FR (€’m)* 476.7 447.9 6.4% 421.0 ES (€’m)* 24.8 23.9 3.8% 14.4 Gross Debt (£’m) 466.9 454.5 £12.4m 436.8 Net Debt (£’m)*
Slide 13: Revenue collection UK
13 Revenue collection UK • Above chart shows the percentage of customer rent due that was collected within the period +30days. • Over the period Nov-20 to Apr-21 98.1% of revenue was collected within the period +30 days, compared to 97.3% in the same period last year. • In May-21 75.9% of revenue wa
Slide 14: Revenue collection Paris
14 Revenue collection Paris • Above chart shows the percentage of customer rent due that was collected within the period +30days. • Over the period Nov-20 to Apr-21 87.9% of revenue was collected within the period +30 days, compared to 85.3% in the same period last year. • In May-21 73.2% of revenue
Slide 15: Strong store margin progression over last 7.5 years
15 Strong store margin progression over last 7.5 years Store EBITDA Margin % has grown +9.1%pts over the last 7.5 years.
Slide 16: Guidance – non trading and one-off items
16 Guidance – non trading and one-off items Item Guidance Foreign exchange impact Strengthening of the Euro (1.135 in HY2021, 1.162 in FY2020) contributed £0.3m EBITDA after leasehold rent. In the year, each 10c fluctuation would have a c.£1.0m impact on Group EBITDA after leasehold costs and c.£0.6
Slide 17: Operational Delivery
17 Glasgow Rutherglen Store Operational Delivery Frederic Vecchioli Frederic Vecchioli
Slide 18: N°1 UK online storage brand
18 N°1 UK online storage brand Customer journey begins online • More move-ins per year than any other operator • 89% of enquiries are online – of which c. 64% on a smartphone. Pandemic has accelerated shifts. • Continued investment to drive efficiencies on Paid search – Maps & SEO – Digital marketin
Slide 19: Safestore European Platform
19 Safestore European Platform Spain: Benelux JV: • Barcelona: • Safestore operating model expanding into Benelux countries • Occupancy stable at c.90% • 9 Stores in the Netherlands and 6 in Belgium • Revenue growth last quarter +11.5% year-on-year • Additional development site acquired in the Nethe
Slide 20: Stable operational drivers
20 Stable operational drivers UK operations • April closing occupancy +11%pts, + 721k sq ft year-on-year • HY move-ins +23% on prior year • HY move-outs +12% on prior year • 2020 delayed vacates took place as expected in H1 – no pent up vacates • Age of existing customers base now 1 month younger th
Slide 21: Continued trading delivery and MLA extension
21 Continued trading delivery and MLA extension Stores opened or acquired since Oct 13 83.4% Stores 63.1% open at Oct 13 Same Store 2013 2014 2015 2016 2017 2018 2019 2020 HY 2021 Avg. Rate (CER) £24.95 £24.98 £26.26 £27.21 £27.52 £27.62 £27.82 £28.38 £28.48 Average Rate (CER) YoY 0.1% 5.1% 3.6% 1.1
Slide 22: Pricing
22 Pricing Balanced Revenue Management approach – focus on revenue maximisation Centralised pricing management: • Structured Data warehouse with experience of 1,200,000 move-ins • Robust and granular capture at every point from keyword click through conversion funnel and entire customer life • Scale
Slide 23: Store teams create value
23 Store teams create value Operational focus leads to higher REVPAF, revenue growth and customer satisfaction Self-storage is not a commodity : • 75% of customers are first time users • Customers are looking for: • Trust and reassurance about using Self-Storage and the Company to store their belong
Slide 24: Portfolio development
24 Portfolio development Pipeline: MLA FY of Continued self-funded expansion: opening • 2016 to 2020: MLA average increase of c. 400,000 sq ft London Edgware – Extension 22,900 2021 Southend – Extension 10,100 2021 per year through development and acquisitions London Morden 52,000 2022 London Bow 74
Slide 25: Further growth opportunities
25 Further growth opportunities As at 30 Apr 2021 Group London & UK Paris Spain SE Regions Current Maximum lettable area (m sq ft) 6.98 2.78 2.73 1.36 0.11 Let Square Feet (m sq ft) 5.64 2.29 2.18 1.07 0.10 Current Available space (m sq ft) 1.34 0.49 0.55 0.29 0.01 Pipeline / Extensions Maximum lett
Slide 26: Flexible investment model
26 Flexible investment model UK Lease regears – demonstrable track record • c. 64% of UK leases regeared since 2012 • Leases regeared: Hayes • All leases in England within renewal protection rights of the Landlord and Tenant Act FR lease regularly renewed • “Commercial Property” ownership • All leas
Slide 27: Total Shareholder Return
27 Total Shareholder Return Since Oct 13, 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 28: Well positioned for further growth
28 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 • 70% of revenue from London / South East and Paris • Unlet invested space equivalent to around 45 stores incl
Slide 29: Appendices
29 Appendices
Slide 30: Index
30 Index: CSR 57 UK regional market position 31 CSR Update 58 Paris development characteristics Financial 59 French leases 35 Detailed P&L 36 Non-underlying items Portfolio summary: 37 Detailed Balance Sheet 60 Geographic 38 Underlying to Statutory Adjustments 61 Freehold / Leasehold 40 Movement in
Slide 31: Sustainability @ Safestore
31 Sustainability @ Safestore
Slide 32: We have aligned to relevant Sustainable Development Goals
32 We have aligned to relevant Sustainable Development Goals
Slide 33: Sustainability Targets and KPIs
33 Sustainability Targets and KPIs
Slide 34: Significant progress on GHG
34 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 35: Detailed P&L
35 Detailed P&L Group HY 2021 HY 2020 £’m £’m Revenue 88.1 79.3 Cost of sales (27.7) (27.5) Gross profit 60.4 51.8 Administrative expenses (14.9) (10.0) Underlying EBITDA * 54.4 45.9 Exceptional Items (1.9) (0.4) Depreciation and variable lease payments (0.8) (0.6) Share based payments (5.9) (2.8) S
Slide 36: Non-underlying items
36 Non-underlying items HY 2021 HY 2020 (£'m) (£'m) Underlying EBITDA 54.4 45.9 Gain on investment properties and 127.7 64.0 investment properties under construction Depreciation (0.5) (0.4) Variable lease payments (0.3) (0.2) Share-based payments (5.9) (2.8) Exceptional items (1.9) (0.4) Share of a
Slide 37: Detailed Balance Sheet
37 Detailed Balance Sheet Group HY 2021 HY 2020 £’m £’m Assets Non-current assets Investment properties 1,683.8 1,451.2 Investment properties under construction 18.2 15.6 Other non-current assets 87.0 89.2 Non-current assets 1,789.0 1,556.0 Current assets 68.4 43.1 Liabilities Current liabilities (6
Slide 38: HY 2021 Underlying to Statutory adjustments
38 HY 2021 Underlying to Statutory adjustments Variable Underlying Share based Derivative lease Valuation Finance Dep'n LH Share of Tax / CGS / Statutory Underlying Headings Exceptionals payments Movements payments/ Movement Lease Int properties Associate FX Statutory Headings P&L P&L Dep'n Sales 88
Slide 39: HY 2020 Underlying to Statutory adjustments
39 HY 2020 Underlying to Statutory adjustments Variable Underlying Share based Derivative lease Valuation Finance Dep'n LH Share of Tax / CGS / Statutory Underlying Headings Exceptionals payments Movements payments/ Movement Lease Int properties Associate FX Statutory Headings P&L P&L Dep'n Sales 79
Slide 40: Movement in Cost Base
40 Movement in Cost Base Cost of Sales Administrative Expenses HY 2021 HY 2020 HY 2021 HY 2020 (£'m) (£'m) (£'m) (£'m) Reported cost of sales (27.7) (27.5) Reported administrative expenses (14.9) (10.0) Adjusted for: Adjusted for: Depreciation 0.5 0.4 Share based payments 5.9 2.8 Variable lease paym
Slide 41: Group Banking Covenants
41 Group Banking Covenants – Apr 2021 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 42: Group Debt position at 30 April 2021
42 Group Debt position at 30 April 2021 Term Facility Drawn Hedged Hedged Bank Hedged Floating Total £/€/'m £'m £'m % Margin Rate Rate Rate UK Revolver Jun 22/Jun 23 £ 250.0 157.0 55.0 35% 1.25% 0.8152% 0.05% 1.57% UK Revolver - non-utilisation £ 93.0 - - - 0.50% - - 0.50% Euro Revolver Jun22/Jun 23
Slide 43: New Debt from H2 2021
43 New Debt from H2 2021 Term Facility Bank Hedged Floating Total £/€/'m Margin Rate Rate Rate US Private Placement 2028 Jun-28 £ 20.0 1.96% - - 1.96% US Private Placement 2031 Aug-31 £ 80.0 2.39% - - 2.39% US Private Placement 2028 Jun-28 € 29.0 0.93% - - 0.93% US Private Placement 2033 Aug-33 € 29
Slide 44: Hedging of Euro Earnings – FX Forwards
44 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 45: Diversified drivers and business geography generate resilient revenue and profits
45 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 46: Revenue predictability and resilience
46 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 47: National Accounts and Customer Support Centre
47 National Accounts and Customer Support Centre National Accounts: • Leverage UK platform further and accounts for 12% 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 48: Portfolio strength with further potential
48 Portfolio strength with further potential • 161 store portfolio (As at Apr 21) • 7.0m maximum lettable area • 1.35m sq ft available – 0.8m London, South East and Paris UK • 48 stores within the M25 (128 stores) • 29 stores in Paris • 4 stores in Barcelona • 23 stores in the South East • 57 stores
Slide 49: Densest network of stores in London and Paris
Densest network of stores in 49 London and Paris Paris and London combined represent 77 stores – £49.5m of Revenue, £35.7m of Store EBITDA
Slide 50: Paris unique competitive market position
50 Paris unique competitive market position Very solid market fundamentals: • 23 years of uninterrupted growth • Closing occupancy up 8.8% • Unique and densest network of stores in central Paris • Opportunity to leverage digital platform • Density of storage facilities a third of London (0.36 sq ft)
Slide 51: Limited UK Supply
51 Limited UK Supply Growing and fragmented industry: • 1,997 self storage sites (of which 598 are container sites) – 998 storage businesses • Fragmented market with the six largest operators only owning 388 UK stores (128 stores) • c. 44 new stores per annum expected in 2021 and c. 48 in 2022 Immat
Slide 52: Property valuation movement
52 Property valuation movement (excluding investment properties under construction) Key assumptions Apr 2021* Oct 2020 Apr 2020* Average Self Storage rate per sq ft £26.51 £26.44 £26.52 Exit Cap rate (Freehold only) 6.2% 6.4% 6.6% Weighted average stabilised occupancy 88.6% 87.1% 84.8% Average numbe
Slide 53: New, pipeline and extension stores
53 New, pipeline and extension stores Store FH/ LH Status MLA SQFT Target Opening Other London- Bow FH Completed 74,000 Q1 2022 Conversion of existing building London- Lea Bridge FH Contracts exchanged/ 76,500 Q4 2024 New build. subject to planning £170k pa of rental income prior to opening. London-
Slide 54: Development characteristics
54 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 20% of market* • Only
Slide 55: Very strong position in the two best European markets for storage
55 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 56: Une Pièce en Plus – strong market characteristics
56 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 57: Leading market positions in key UK regional conurbations
57 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 58: Paris development characteristics
58 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 59: French Commercial Lease Statute provides security of tenure
59 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 60: Portfolio summary split geographically
60 Portfolio summary split geographically London & Rest of UK Paris Spain Group South East UK Number of stores 71 57 128 29 4 161 Let Square Feet (m sq ft) 2.29 2.18 4.47 1.07 0.10 5.64 Maximum Lettable Area (m sq ft) 2.78 2.73 5.51 1.36 0.11 6.98 Let Square Feet per store (k sq ft) 32 38 35 37 24 3
Slide 61: Portfolio summary split between freehold and leasehold
61 Portfolio summary split between freehold and leasehold HY 2021 HY 2020 UK Paris Spain Group UK Paris Spain Group FreeholdLeasehold FreeholdLeasehold FreeholdLeasehold Freehold Leasehold FreeholdLeasehold FreeholdLeasehold FreeholdLeasehold FreeholdLeasehold Number of stores 92 36 18 11 1 3 111 50
Slide 62: Portfolio summary split between freehold and leasehold (LFL CER)
62 Portfolio summary split between freehold and leasehold (LFL CER) HY 2021 HY 2020 UK Paris Spain Group UK Paris Spain Group Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Number of stores 86 35
Slide 63: Portfolio summary split by maturity
63 Portfolio summary split by maturity HY 2021 HY 2020 Developing Established Mature Total Developing Established Mature Total Number of stores 12 8 141 161 11 6 141 158 MLA self storage only (m) 0.549 0.395 6.040 6.984 0.480 0.304 5.998 6.782 Closing occupancy (m) 0.295 0.332 4.993 5.620 0.172 0.22
Slide 64: Portfolio summary split by maturity (LFL CER)
64 Portfolio summary split by maturity (LFL CER) HY 2021 HY 2020 Developing Established Mature Total Developing Established Mature Total Number of stores 5 8 136 149 5 8 136 149 MLA self storage only (m) 0.276 0.394 5.888 6.558 0.367 0.304 5.849 6.520 Closing occupancy (m) 0.182 0.332 4.866 5.380 0.
Slide 65: Safestore UK historic performance
65 Safestore UK historic performance EBITDA in 2017 and 2018 has been adjusted for Share based payment charge
Slide 66: Customer length of stay
66 Customer length of stay UK Paris Group HY 2021 HY 2020 HY 2021 HY 2020 HY 2021 HY 2020 (mths) (mths) (mths) (mths) (mths) (mths) Business Existing 29.8 32.0 32.6 35.8 30.3 32.7 Vacated 12.5 12.3 14.3 13.8 12.7 12.5 Total 13.9 13.9 16.2 16.2 14.2 14.2 Personal Existing 20.0 21.6 28.3 28.3 22.1 23.
Slide 67: Group customer split as at 30 Apr 2021
67 Group customer split as at 30 Apr 2021
Slide 68: Personal and business customers as at 30 Apr 2021
68 Personal and business customers as at 30 Apr 2021 Personal and Business Customers UK Paris Spain Personal Customers Numbers (% of total) 77% 83% 88% Square feet occupied (% of total) 58% 67% 82% Average length of stay (months) 20.0 28.3 21.1 Business Customers Numbers (% of total) 23% 17% 12% Squ