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Turnaround at Safestore

Safestore is now starting to see the benefits of the significant operational gearing in its business model.
January 23, 2015

Frederic Vecchioli has not been chief executive of Safestore (SAFE) for very long - he took up the position in September 2013 - but a turnaround at the self-storage group is already in evidence. Much of last year's stronger performance reflects the group's success in pushing through higher rents, with year-on-year rates up by 4 per cent in the fourth quarter. Meanwhile, new lettings grew by nearly 20 per cent in the UK.

IC TIP: Buy at 262p

No new sites were opened in Paris, where planning consent is virtually impossible to secure, and there are just three development sites with planning consent under consideration in the UK. However, there is plenty of room for growth even without new facilities. Although the average occupancy rate rose from 65.3 per cent to 68.8 per cent last year, that still leaves 1.6m square feet of storage space unoccupied.

Earnings per share are not directly comparable, as the previous year's number included a £60m deferred tax liability that was credited back when the group took on the tax status of a real estate investment trust. Analysts at Investec are forecasting normalised pre-tax profits of £33.8m for the current year, giving EPS of 15.1p (from £28.5m and 12.4p in 2013-14).

SAFESTORE (SAFE)
ORD PRICE:262pMARKET VALUE:£543m
TOUCH:262-263p12-MONTH HIGH:267pLOW: 165p
DIVIDEND YIELD:2.8%TRADING PROPERTIES:nil
PREMIUM TO NAV:20% 
INVESTMENT PROP:£760mNET DEBT:74%

Year to 31 OctNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201014429.214.14.95
20111478.67.05.30
2012130-19.5-4.25.65
201321048.657.85.75
201421852.423.27.45
% change+4+8-60+30

Ex-div: 12 Mar

Payment: 8 Apr