Self-storage company Safestore is countering the effects of the housing downturn by winning more custom from business clients, reporting half-year results in line with expectations and maintaining its dividend.
Four years ago, business customers accounted for less than 20 per cent of occupied space - at the half year this had risen to 56 per cent. "We've woken up to the growth potential and we're marketing it much better," explains chief executive Steve Williams, adding that flexibility is the main attraction. The business bias has upped the average length of stay to 91 weeks from 77 weeks two years ago.
Overall occupancy figures for the six-months 30 April 2009 were flat, but average rental rates rose 7.2 per cent to £25 per sq ft. Ancillary income (from the sale of insurance and packaging materials) rose 4.8 per cent to £5.4m.
"Domestic occupiers seem to have stabilised, and online inquiries are increasing," adds Mr Williams, noting that inquiries made via Safestore's website in June "are the highest we've ever had".
| SAFESTORE (SAFE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 91p | MARKET VALUE: | £171m | |
| TOUCH: | 90-92p | 12-MONTH HIGH: | 162p | LOW: 38p |
| DIVIDEND YIELD: | 1.8% | TRADING STOCK: | na | |
| DISCOUNT TO NAV: | 30% | |||
| INVESTMENT PROPERTIES: | £715m | NET DEBT: | 142% | |
| Half-year to 30 Apr | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 145 | 28.5 | 11.0 | 1.65 |
| 2009 | 130 | -11.7 | -3.6 | 1.65 |
| % change | -10 | - | - | - |
Ex-div: 8 Jul Payment: 12 Aug | ||||
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The company, which owns and leases 93 UK centres and a further 21 sites in France, saw a negative movement of £30m on its property portfolio in the period. However, a £13m currency gain on the value of its French assets and a £14.8m valuation uplift on new store openings resulted in a slight overall increase in the portfolio's value. Safestore has been protected from the steep falls in value seen at mainstream property companies because of the cash-flow characteristics of the self-storage business model, and remains compliant with banking covenants.
Broker Collins Stewart forecasts full-year NAV of 164p (202p in 2008)
