Safestore Holdings Plc · LSE:SAFE
Safestore — FY2021 Earnings Presentation
66 slides from Safestore's earnings presentation, Jan 13, 2022
Slide 1: Full Year Presentation 13 January 2022
Full Year Presentation 13 January 2022
Slide 2: Introduction
Introduction Frederic Vecchioli
Slide 3: Continued strong record of value creation
3 Continued strong record of value creation +94% +131% +8.7% CAGR +11.1% CAGR +279% +333% +18.1% CAGR +20.1% CAGR EBITDA and EPRA EPS adjusted for historic share based payment charges and current dilutive shares
Slide 4: Highlights
4 Highlights Group operational delivery A record year for performance: • Total Revenue up 15.1% - Like-for-like CER Revenue up 13.8% • Like-for-like average occupancy for the period up 11.8% - Like-for-like closing occupancy up 6.6% (up 5.0 ppts on 2020) • Like-for-like average storage rate for the
Slide 5: Highlights
5 Highlights Prime asset base and strong pipeline to deliver further growth • 2.0m sq ft of MLA available for further growth (including Pipeline) • Acquisition of freehold store in Christchurch • London Bow store and three store extensions completed in Dec 21 • Pipeline of 16 new stores and 2 extens
Slide 6: Financials
Newcastle Central Store Financials Andy AndyJones Jones
Slide 7: Financial highlights
7 Financial highlights Change vs Income Statement & Cash flow FY 2021 FY 2020 Absolute CER² Revenue (£’m) like-for-like1 178.7 13.4% 13.8% Underlying EBITDA (£’m) like-for-like1 113.3 23.3% 23.7% Revenue (£’m) 186.8 15.1% 15.5% Underlying EBITDA (£’m) 118.0 25.7% 26.2% Underlying EBITDA (post leaseh
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 2.283 2.114 4.397 1.077 5.474 (sq ft ‘m) YoY 10.6% 16.3% 13.3% 6.1% 11.8% Act 86.0% 84.9% 85.4% 83.6% 85.1% Closing Occupancy LFL1 % YoY 4.5ppts 5.6ppts 5.0ppts 4.8ppts 5.0ppts Av
Slide 9: Group P&L
9 Group P&L FY 2021 FY 2020 UK Paris Spain Total UK Paris Spain Total (£'m) (€'m) (€'m) (£'m CER) (£'m) (€'m) (€'m) (£'m CER) Revenue 144.1 46.0 3.3 187.5 121.3 44.1 2.5 162.3 Underlying Cost of Sales (45.2) (11.2) (0.7) (55.7) (44.3) (11.8) (0.5) (55.1) Store EBITDA 98.9 34.8 2.6 131.8 77.0 32.3 2.
Slide 10: Rate and occupancy increase drives improved EBITDA (after leasehold rent)
10 Rate and occupancy increase drives improved EBITDA (after leasehold rent) Facilities and rates: 1.3 Volume related/remuneration: (1.0) Enquiry generation: 0.5 New stores: (1.4) CER 29.8% improvement Figures above excludes share of associate EBITDA
Slide 11: Excellent cash conversion
11 Excellent cash conversion FY 2021 FY 2020 (£'m) (£'m) Underlying EBITDA 118.0 93.9 Working Capital/ Exceptionals/ Other (2.1) 1.9 Adjusted operating cash inflow 115.9 95.8 Interest payments (8.0) (8.9) Leasehold rent payments (13.0) (12.8) Tax payments (5.4) (5.3) Free cash flow (before investing
Slide 12: Strong and flexible Balance Sheet
12 Strong and flexible Balance Sheet Capital Structure Oct 21 Oct 20 Variance Property valuation (£’m)* 1,949.2 1,571.5 24.0% UK (£’m)* 1,474.8 1,146.9 28.6% FR (€’m)* 521.6 447.9 16.5% ES (€’m)* 42.7 26.4 61.7% Gross Debt (£’m) 484.7 454.5 £30.2m Net Debt (£’m)** 441.5 434.9 £6.6m Group LTV**** 24.
Slide 13: Consistent store margin progression over last 8 years
13 Consistent store margin progression over last 8 years Growth over the last 8 years: • Revenue +60.9% • Store EBITDA Margin +16.1% CAGR over the last 8 years: • Revenue +6.1% • Store EBITDA Margin +1.9%
Slide 14: Guidance – non trading and one-off items
14 Guidance – non trading and one-off items Item Guidance Foreign exchange impact Slight weakening of the Euro (1.152 in FY2021, 1.136 in FY20) 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. £1.8m of Group
Slide 15: Operational Delivery
15 Gateshead Store Operational Delivery Frederic Vecchioli Frederic Vecchioli
Slide 16: Scale: N°1 UK online storage brand
16 Scale: N°1 UK online storage brand Customer journey begins online • More UK move-ins per year than any other operator • 89% of UK enquiries are online – of which c. 64% on a smartphone. Pandemic has accelerated shifts • Group marketing cost 3.7% of revenue (4% in the UK – 2% in FR) - Lowest perce
Slide 17: Balanced Revenue Management approach
17 Balanced Revenue Management approach Target is revenue growth with optimized combination of occupancy and revenue: • Pricing analytics based on Data warehouse with experience of 1,375,000 move-ins and customer life data points • Systems very reactive to change of circumstances for new and existin
Slide 18: Diversified customer base
18 Diversified customer base • UK Mix of Business / Personal customers showing consistent movement each year towards Personal customers now 58% of c. 8% - 13% sq ft occupied (57% FY2020 – 53% in 2015) owner occupier Personal = 10.7% CAGR - Business = 5.9% CAGR • Repartitioning larger business units
Slide 19: Revenue predictability and resilience
19 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 20: Trading delivery and MLA extension
20 Trading delivery and MLA extension Stores opened or acquired since Oct 13 86% Stores 63% open at Oct 13 Group: • Last 6 years (since store opening programme restarted) – Occupancy CAGR +8.6% & Rate CAGR: +1.4% = +10.4% Storage revenue CAGR • Same store (store opened in 2013) contributed 48% of St
Slide 21: Portfolio development
21 Portfolio development Pipeline: MLA FY of opening Continued self-funded expansion: London Bow 74,000 2022 • 2016 to 2021: MLA average increase of c. 340,000 sq ft London Paddington Marble Arch – Extension 8,500 2022 London Edgware – Extension 22,900 2021 per year through development and acquisiti
Slide 22: Further growth opportunities
22 Further growth opportunities As at 31 Oct 2021 Group London & UK Paris Spain SE Regions Current Maximum lettable area (m sq ft) 6.96 2.80 2.69 1.36 0.11 Let Square Feet (m sq ft) 5.88 2.41 2.28 1.10 0.09 Current Available space (m sq ft) 1.08 0.39 0.41 0.26 0.02 Developments / Extensions complete
Slide 23: Yield by year of opening
23 Yield by year of opening Portfolio average Investment hurdle (*) Non-mature recent investments (*) Investment hurdle: minimum cash on cost target at maturity Cash on Cash is from Store EBITDA after rent divided by Historical cost
Slide 24: Flexible investment model
24 Flexible investment model UK Lease regears – demonstrable track record • c. 64% of UK leases regeared since 2012 • Leases regeared in FY2021: Hayes • All leases in England within renewal protection rights of the Landlord and Tenant Act FR lease regularly renewed • “Commercial Property” ownership
Slide 25: Sector leading total shareholder return
25 Sector leading 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 26: Safestore has low emissions intensity
26 Safestore has low emissions intensity Self Storage is the lowest emission intensity real estate sub-sector*, despite usually including some tenant emissions Safestore emissions less than 70% of <1 Kg/ m2 using market-based method for scope 2 (100% renewable self storage sector average electricity
Slide 27: Safestore ESG commitments
27 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 28: Strategy for operational net zero
28 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 29: Well positioned for further growth
29 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 • 69% of revenue from London / South East and Paris • Unlet invested space equivalent to around 45 stores incl
Slide 30: Appendices
30 Appendices
Slide 31: Index
31 Index: CSR 55 UK regional market position 32 CSR Update 56 Paris development characteristics Financial 57 French leases 35 Detailed P&L 36 Non-underlying items Portfolio summary: 37 Detailed Balance Sheet 58 Geographic 38 Underlying to Statutory Adjustments 59 Freehold / Leasehold 40 Movement in
Slide 32: Sustainability @ Safestore
32 Sustainability @ Safestore
Slide 33: We have aligned to relevant Sustainable Development Goals
33 We have aligned to relevant Sustainable Development Goals
Slide 34: Significant progress on GHG
34 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 35: Detailed P&L
35 Detailed P&L Group FY 2021 FY 2020 £’m £’m Revenue 186.8 162.3 Cost of sales (56.9) (56.3) Gross profit 129.9 106.0 Administrative expenses (34.0) (20.3) Underlying EBITDA * 118.0 93.9 Exceptional Items (1.9) (0.2) Depreciation and variable lease payments (1.4) (1.2) Share based payments (18.3) (
Slide 36: Non-underlying items
36 Non-underlying items FY 2021 FY 2020 (£'m) (£'m) Underlying EBITDA 118.0 93.9 Gain on investment properties and 321.1 126.5 investment properties under construction Depreciation (1.0) (0.9) Variable lease payments (0.4) (0.3) Share-based payments (18.3) (6.5) Exceptional items (1.9) (0.2) Share o
Slide 37: Detailed Balance Sheet
37 Detailed Balance Sheet Group FY 2021 FY 2020 £’m £’m Assets Non-current assets Investment properties 1,881.8 1,557.5 Investment properties under construction 67.4 14.0 Other non-current assets 94.2 86.1 Non-current assets 2,043.4 1,657.6 Current assets 73.9 43.5 Liabilities Current liabilities (8
Slide 38: FY 2021 Underlying to Statutory adjustments
38 FY 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 18
Slide 39: FY 2020 Underlying to Statutory adjustments
39 FY 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 16
Slide 40: Movement in Cost Base
40 Movement in Cost Base Cost of Sales Administrative Expenses FY 2021 FY 2020 FY 2021 FY 2020 (£'m) (£'m) (£'m) (£'m) Reported cost of sales (56.9) (56.3) Reported administrative expenses (34.0) (20.3) Adjusted for: Adjusted for: Depreciation 1.0 0.9 Share based payments 18.3 6.5 Variable lease pay
Slide 41: Group Banking Covenants
41 Group Banking Covenants – Oct 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 October 2021
42 Group Debt position at 30 October 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 32.0 32.0 100% 1.25% 0.8152% 0.05% 2.07% UK Revolver - non-utilisation £ 218.0 - - - 0.50% - - 0.50% Euro Revolver Jun22/Jun
Slide 43: Hedging of Euro Earnings – FX Forwards
43 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 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 occupier 2015 2016 2017 2018 2019 2020 2021 Personal Customers Numbers (% of total) 74% 75% 75% 76% 77% 78% 78% Square feet occupied (% of total) 53% 54% 55% 56% 58% 59% 59% 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 13% of all occupancy in the UK • Two-thirds of customers outside London Customer Support Centre: • CSC handled 11% of all enquiries • Supports the sales teams in store
Slide 46: Portfolio strength with further potential
46 Portfolio strength with further potential • 161 store portfolio (As at Oct 21) • 7.0m maximum lettable area • 1.1m sq ft available – 0.7m London, South East and Paris • 48 stores within the M25 UK • 29 stores in Paris (128 stores) • 4 stores in Barcelona • 23 stores in the South East • 57 stores
Slide 47: Densest network of stores in London and Paris
Densest network of stores in 47 London and Paris Paris and London combined represent 77 stores – £103.5m of Revenue, £75.0m of Store EBITDA
Slide 48: Paris unique competitive market position
48 Paris unique competitive market position Very solid market fundamentals: • 23 years of uninterrupted growth • Closing occupancy up 6.4% • 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 49: Limited UK Supply
49 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 50: Property valuation movement
50 Property valuation movement (excluding investment properties under construction) Key assumptions Oct 2021 Apr 2021* Oct 2020 Average Self Storage rate per sq ft £26.95 £26.51 £26.44 Exit Cap rate (Freehold only) 6.0% 6.2% 6.4% Weighted average stabilised occupancy 89.1% 88.6% 87.1% Average number
Slide 51: New, pipeline and extension stores
51 New, pipeline and extension stores Store FH/ LH Status MLA SQFT Target Opening Other London- Lea Bridge FH Completed/ Subject to Planning 76,500 Q1 2025 New build. £170k pa of rental income prior to opening. London- Old Kent Road FH Completed/ Subject to Planning 76,500 TBC New build. Rental Inco
Slide 52: Development characteristics
52 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 ✓ ✓ ✓ ✓ • Six largest UK operators own just 20% of market* • Only
Slide 53: Very strong position in the best European markets for storage
53 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 54: Une Pièce en Plus – strong market characteristics
54 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 55: Leading market positions in key UK regional conurbations
55 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 56: Paris development characteristics
56 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 57: French Commercial Lease Statute provides security of tenure
57 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 58: Portfolio summary split geographically
58 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) 2.41 2.28 4.69 1.10 0.09 5.88 Maximum Lettable Area (m sq ft) 2.80 2.69 5.49 1.36 0.11 6.96 Let Square Feet per store (k sq ft) 34 40 37 38 23 3
Slide 59: Portfolio summary split between freehold and leasehold
59 Portfolio summary split between freehold and leasehold FY 2021 FY 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 60: Portfolio summary split between freehold and leasehold (LFL CER)
60 Portfolio summary split between freehold and leasehold (LFL CER) FY 2021 FY 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 61: Portfolio summary split by maturity
61 Portfolio summary split by maturity FY 2021 FY 2020 Developing Established Mature Total Developing Established Mature Total Number of stores 12 8 141 161 12 6 141 159 MLA self storage only (m) 0.549 0.395 6.016 6.960 0.527 0.304 6.031 6.862 Closing occupancy (m) 0.405 0.341 5.123 5.869 0.286 0.24
Slide 62: Portfolio summary split by maturity (LFL CER)
62 Portfolio summary split by maturity (LFL CER) FY 2021 FY 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 0.395 5.909 6.580 0.367 0.304 5.880 6.551 Closing occupancy (m) 0.212 0.341 5.030 5.583 0.
Slide 63: Safestore UK historic performance
63 Safestore UK historic performance EBITDA in 2017 and 2018 has been adjusted for Share based payment charge
Slide 64: Customer length of stay
64 Customer length of stay UK Paris Group FY 2021 FY 2020 FY 2021 FY 2020 FY 2021 FY 2020 (mths) (mths) (mths) (mths) (mths) (mths) Business Existing 28.0 29.9 31.9 34.7 28.7 30.7 Vacated 12.6 12.4 14.3 14.1 12.8 12.7 Total 13.8 13.9 16.2 16.3 14.2 14.2 Personal Existing 18.9 19.8 28.0 27.7 21.2 21.
Slide 65: Group customer split as at Oct 2021
65 Group customer split as at 31 Oct 2021
Slide 66: Personal and business customers as at Oct 2021
66 Personal and business customers as at 31 Oct 2021 Personal and Business Customers UK Paris Spain Personal Customers Numbers (% of total) 76% 83% 88% Square feet occupied (% of total) 58% 66% 81% Average length of stay (months) 18.9 28.0 22.9 Business Customers Numbers (% of total) 24% 17% 12% Squ