FOR IMMEDIATE RELEASE
22 June 2016
Safestore Holdings plc
("Safestore" or the "Group")
Acquisition of Space Maker
Earnings accretive from completion
Safestore is pleased to announce that the condition necessary to acquire Space Maker Stores Limited ("SMS") has been satisfied and completion of the acquisition is expected by 29 July 2016. The acquisition is expected to be immediately accretive to Group earnings per share from completion and will support the Group's future dividend capacity.
An initial consideration of £43.0m less certain downward adjustments to the enterprise value ("initial consideration") will be payable in cash on completion of the acquisition. Up to £1.4m of deferred consideration ("deferred consideration") may become payable in cash between six months and three years from the date of completion, subject to the SMS business achieving certain performance targets during that period.
Safestore has a strong operational knowledge of the SMS portfolio, having managed the business since 2010 under a management services agreement for which Safestore received £0.6m per annum.
This acquisition will reinforce Safestore's position as the leading operator in the UK by number of stores with a combined total of 110 stores1, 63 of which will be in London and the South East. The SMS portfolio was operating at 62% occupancy (of built out lettable area) at the end of April 2016 which Safestore believes it can improve once fully integrated into its own operational platform.
In the year to 30 April 2016, SMS delivered EBITDA (before management fees) of £3.9m (unaudited) on turnover of £8.7m. At the initial consideration price, the SMS portfolio has an implied first year net operating income yield of c.9.4%2 before the impact of management charges which would rise to c.12% if the SMS stores achieve 80% occupancy at today's rental rate levels.
The SMS business, which had pro forma gross assets3 of £45.6m at 30 April 2015, will be acquired on a debt free basis with the total consideration (comprising the initial consideration and, if applicable, the deferred consideration) expected to be c. £44.4m. The acquisition will be funded from the Group's existing debt facilities, with £45m of the Group's £60m accordion facility converted into a committed revolving credit facility. On a pro forma basis, the Group's Loan to Value ratio post completion of this acquisition would be c.34% compared to 30% at 30 April 2016.
Notes
1 - Includes the openings of new stores in Chiswick, Birmingham, Wandsworth and Altrincham later this year.
2 - Based on unaudited EBITDA before the impact of management charges for the year ended 30 April 2016 and including the impact of estimated cash to be acquired with the business.
3 - Includes the impact of a property valuation subsequently performed but which was not reflected in the April 2015 UK GAAP statutory accounts, but excludes interests in leasehold properties estimated at c.£10m, which would be offset in the balance sheet by an equal and opposite finance lease liability. UK GAAP gross assets at April 2015, before adjustment, were £17.1m.
For further information, please contact:
Safestore Holdings plc
Frederic Vecchioli, Chief Executive Officer
Andy Jones, Chief Financial Officer Tel: 020 8732 1565
www.safestore.com
About Safestore
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Safestore is the UK's largest self-storage group with 119 stores, comprising 95 wholly owned stores in the UK (including 56 in London and the South East with the remainder in key metropolitan areas such as Manchester, Birmingham, Glasgow, Edinburgh, Liverpool and Bristol) and 24 wholly owned stores in the Paris region. In addition, Safestore currently has 12 Space Maker stores under management in the UK. |
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Safestore operates more self-storage sites inside the M25 and in central Paris than any competitor providing more proximity to customers in the wealthiest and densest UK and French markets. |
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Safestore was founded in the UK in 1998. It acquired the French business "Une Pièce en Plus" ("UPP") in 2004 which was founded in 1998 by the current Safestore Group CEO Frederic Vecchioli. |
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Safestore has been listed on the London Stock Exchange since 2007. It entered the FTSE 250 index in October 2015. |
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The Group provides storage to around 48,300 personal and business customers. |
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Safestore (excluding Space Maker) has a maximum lettable area ("MLA") of 4.925 million sq ft (excluding the expansion pipeline stores) of which 3.490 million sq ft was occupied at 30 April 2016. |
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Safestore employs around 525 people in the UK and France. |
About Space Maker
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SMS is the ninth largest self-storage portfolio in the UK with 12 stores located in Bournemouth (two stores), Colchester, Redhill, Romford, Brentford, Chelmsford, Exeter, Leeds, Plymouth, Portsmouth and Poole, and has a fully invested built out lettable area of c.496, 000 sq ft. Six of the SMS stores are freehold or long leasehold and six are leasehold stores with an average remaining lease length of 16.4 years at 30 April 2016. |
