Self-storage group Safestore (SAFE) has agreed an option to buy Space Maker, the ninth largest self-storage portfolio in the UK, for £43m, giving an implied first-year net operating income yield of around 8.7 per cent.
Safestore already has strong operational knowledge of Space Maker because since 2010 it has managed the SMS portfolio through a management services agreement that generated annual income of £600,000 and which was due to expire in April this year.
Safestore looks to benefit further because there is plenty of scope to improve on the current 61 per cent occupancy level of the 12-store portfolio. Raising this to 80 per cent would lift the rental yield to around 12 per cent. The call option to buy can be exercised at any point in the next two years, but the deal is expected to be completed in around 12 months. The purchase has been structured as an option to allow changes to be made to the portfolio by the vendor, as required by Safestore, before the deal completes.
