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Safestore gathers momentum

Demand for self-storage space is starting to grow, and there are real barriers to entry from new competitors.
June 18, 2015

As a self-storage operator in the UK and Paris, Safestore (SAFE) is pretty well placed to capitalise on the improving economic climate. Underlying cash profits rose by 7.2 per cent to £26.9m in the six months to April, while a valuation uplift of £43.9m reduced the group's loan-to-value ratio from 37 per cent last October to 35 per cent.

IC TIP: Buy at 279.25p

Growing demand helped lift occupancy rates in the UK from 63.4 per cent to 66.8 per cent, while rents increased by 7.5 per cent. In Paris, which accounts for around a fifth of group turnover, the economic environment was tougher, but occupancy rates still rose from 72.1 per cent to 77.2 per cent. Revenue in Paris has now grown for the seventeenth consecutive year, helped by the fact that such a high density of buildings makes it virtually impossible to open new stores.

Yet there is plenty of room to increase revenue without launching new sites, with 200,000 square feet of vacant space in Paris and 1.4m in the UK. The costs of owning and managing a storage facility are fixed, so any increase in revenue drops straight through to the bottom line.

Analysts at Numis are forecasting adjusted net asset value of 231p per share by the October year-end (from 216p in October 2014).

SAFESTORE (SAFE)
ORD PRICE:279.25pMARKET VALUE:£580m
TOUCH:279.25-279.75p12-MONTH HIGH:305pLOW: 184p
DIVIDEND YIELD:3.0%TRADING PROPERTIES:nil
PREMIUM TO NAV:29%
INVESTMENT PROPERTIES:£793mNET DEBT:66%

Half-year to 30 AprNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20141796.92.42.15
201521662.228.83
% change+20--+40

Ex-div: 9 Jul

Payment: 14 Aug