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Safestore Holdings achieve strong Q1 performance

Safestore Holdings plc (LON:SAFE) has today announced its first quarter trading update for the period 1 November 2019 to 31 January 2020.

Group Operating Performance- totalQ1 2020Q1 20192ChangeChange- CER1
Revenue (£’m)39.937.27.3%8.3%
Closing Occupancy (let sq ft- million)34.964.607.8%n/a
Maximum Lettable Area (MLA)46.716.375.3%n/a
Closing Occupancy (% of MLA)74.0%72.2%+1.8pptsn/a
Average Storage Rate (£)26.0726.52(1.7%)(0.6%)
Group Operating Performance- like-for-like5Q1 2020Q1 20192ChangeChange- CER1
Revenue (£’m)39.037.24.8%5.9%
Closing Occupancy (let sq ft- million)34.784.603.9%n/a
Closing Occupancy (% of MLA)75.0%72.2%+2.8pptsn/a
Average Storage Rate (£)26.4326.52(0.3%)0.8%

Highlights 

·   Group revenue for the quarter in CER1 up 8.3% and 7.3% at actual exchange rates as a result of strengthening of sterling in period.

·      Like-for-like5 Group revenue for the quarter in CER1 up 5.9%

o  UK up 6.1%

o  Paris up 5.8%

·      Like-for-like5 occupancy up 2.8ppts at 75.0% (2019: 72.2%)

o  UK up 2.9ppts at 74.0% (2019: 71.1%)

o  Paris up 2.7ppts at 79.3% (2019 76.6%)

·      Like-for-like5 average rate up 0.8% in CER1.

o  UK up 0.5%

o  Paris up 1.7%

·      Total rate in CER1 down 0.6% as a result of dilutive impact of recent Barcelona acquisition6

·      Planning permission granted for Paris Magenta store, anticipated opening in 2020

·      40,000 sq ft freehold store in London Carshalton opened in period

·      Recent store openings and acquisitions performing in line with or ahead of business plans

Business highlights

UK Trading Performance

UK Operating Performance- totalQ1 2020Q1 20192Change
Revenue (£’m)30.328.08.2%
Closing Occupancy (let sq ft- million)33.863.646.0%
Maximum Lettable Area (MLA)45.295.123.3%
Closing Occupancy (% of MLA)73.0%71.1%+1.9ppts
Average Storage Rate (£)24.4724.290.7%
UK Operating Performance- like-for-like5Q1 2020Q1 20192Change
Revenue (£’m)29.728.06.1%
Closing Occupancy (let sq ft- million)33.793.644.1%
Closing Occupancy (% of MLA)74.0%71.1%+2.9ppts
Average Storage Rate (£)24.4224.290.5%

The UK has performed strongly in the first quarter of 2020. Like-for-like revenue growth of 6.1% was driven by a strong occupancy performance, with like-for-like average rate improving as the quarter progressed and finishing the quarter 0.5% higher than the prior year. The like-for-like closing occupancy, as measured by sq ft occupied, was up 4.1% and like-for-like closing occupancy at the end of the quarter as a percentage of MLA was up 2.9ppts at 74.0% (2019: 71.1%).

Total revenue growth of 8.2% reflected the like-for-like growth as well as the acquisitions in 2019 of our Heathrow store and in 2020 of our St Johns Wood and Chelsea stores, along with the recent store openings in Peterborough and Birmingham Merry Hill. The UK also benefited from a full quarter contribution of management fees from our joint venture in the Netherlands which is managed by our UK team. All acquisitions and new store developments are performing in line with or ahead of their business cases.

Paris Trading Performance

Paris Operating Performance- totalQ1 2020Q1 20192Change
Revenue (€’m)11.110.46.7%
Closing Occupancy (let sq ft- million)31.010.965.2%
Maximum Lettable Area (MLA)41.311.254.8%
Closing Occupancy (% of MLA)76.7%76.6%+0.1ppts
Average Storage Rate (€)39.8139.460.9%
Revenue (£’m)9.49.22.2%
Paris Operating Performance- like-for-like5Q1 2020Q1 20192Change
Revenue (€’m)11.010.45.8%
Closing Occupancy (let sq ft- million)30.990.963.1%
Closing Occupancy (% of MLA)79.3%76.6%+2.7ppts
Average Storage Rate (€)40.1339.461.7%
Revenue (£’m)9.39.21.1%

Our Paris business had a good quarter, growing total revenue by 6.7%. Our new 65,000 sq ft store at Pontoise, opened in Summer 2019, is performing strongly and contributed to the total revenue figures. However, the immaturity of this store, as expected, has had a dilutive effect on the closing occupancy (% of MLA) and the average rate.

Like-for-like Euro revenue grew by 5.8% in the quarter. Like-for-like occupancy performance was strong for the quarter with closing occupancy at 79.3%, up 2.7ppts compared to 2019. The like-for-like average rate was up 1.7%, which has shown good momentum over the course of the quarter.  

Sterling equivalent revenue was impacted by the 4.2% strengthening in the Sterling: Euro exchange rate for the quarter compared to Q1 2019. As a result, sterling equivalent total revenue grew by 2.2% and like-for-like revenue by 1.1% compared to Q1 2019.

During the period, planning permission for our new 50,000 sq ft store in central Paris at Boulevard Magenta was confirmed. We anticipate the store opening before the end of 2020.

Barcelona

Our Barcelona business was acquired on 30 December 2019 so has been part of the Group for one month at the end of Q1 2020. It is currently trading in line with its business plan.

1 – CER is Constant Exchange Rates (Euro denominated results for the current period have been retranslated at the exchange rate effective for the comparative period, in order to present the reported results on a more comparable basis).

2 – Q1 2019 is the quarter ended 31 January 2019.

3 – Occupancy excludes offices but includes bulk tenancy. As at 31 January 2020, closing occupancy includes 14,000 sq ft of bulk tenancy (31 January 2019: 14,000 sq ft).

4 – MLA is Maximum Lettable Area.

5 – Like-for-like information includes only those stores which have been open throughout both the current and prior financial years, with adjustments made to remove the impact of new and closed stores, as well as corporate transactions.

6 – The Barcelona business was acquired on 30 December 2019. As a result, only one month of revenue is included in the quarter, which has a dilutive impact on the consolidated Group average rate.

Frederic Vecchioli, Safestore Holdings Chief Executive Officer commented:

“It has been a pleasing start to the financial year. Our first quarter performance has been strong, driven by our core markets of the UK and Paris together with our recent acquisitions in London and Barcelona, as well as our Netherlands JV, performing in line with or ahead of their business plans.

“Our recently opened developments in the UK in Birmingham Merry Hill and Peterborough are performing well and our London Carshalton store opened this week. In addition, we look forward to opening 85,000 sq ft of new space in Gateshead and Sheffield in the coming months. Our 50,000 sq ft site at Paris-Magenta has received planning permission and we anticipate the store opening before the end of 2020. Our strong and flexible balance sheet provides significant funding capacity which allows us to continue to consider strategic value-accretive investments as and when they arise.

“Our priority, and largest opportunity, remains the significant upside from filling the 1.7m square feet of fully invested currently unlet space in our UK, Paris and Barcelona markets. We remain confident in the future and our strong start to the year means the Company is on course to meet the Board’s full year expectations.”

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