Update 6/22/16 – Safestore will move forward with its acquisition of Space Maker Stores (SMS) now that conditions for the purchase have been met. The transaction will be funded from Safestore’s existing debt structure, with £45 million of the group’s £60 million “accordion” financing converted into a revolving credit facility, according to a press release.
In updated financial reporting for its fiscal year to April 30, 2016, SMS had unaudited EBITDA of £3.9 million based on revenue of £8.7 million. At the initial sales price, the SMS portfolio has an implied first-year net-operating-income yield of about 9.4 percent. Safestore believes operational changes could increase that figure to about 12 percent if the SMS portfolio reaches 80 percent occupancy at the present rental rate, the release stated. SMS occupancy was 62 percent at the end of April.
The SMS business indicated gross assets of £45.6 million on its pro forma as of April 30, 2015. Safestore earned £600,000 per year managing the portfolio.
3/14/16 – Safestore Holdings PLC, which operates 131 self-storage facilities in France and the United Kingdom, has signed an option agreement to acquire Space Maker Stores Ltd. (SMS) from Allodial Capital Ltd. and James Elton for up to £44.4 million. The deal includes £43 million in cash and up to £1.4 million in deferred consideration, which could be paid between six months and three years after closing, according to a press release. The 12-property, U.K. portfolio, which is currently under Safestore management, comprises 496,000 square feet of rentable space.
Six of the SMS properties are freehold or long leasehold, while the other half are leasehold locations with an average remaining lease length of 16.6 years, the release stated. Safestore has managed the portfolio since 2010, but its contract was set to expire at the end of April. It will continue to manage the portfolio through the completion of the transaction. The portfolio is at 61 percent occupancy, but Safestore indicated it believes it can improve that figure once the SMS properties are “fully integrated into its own operational platform.”
The SMS business “is expected to be earnings accretive from the completion of the acquisition,” said Frederic Vecchioli, CEO for Safestore. “We have a strong operational knowledge of Space Maker, having managed the business since 2010 under a management-services agreement.”
In its fiscal year to April 30, 2015, SMS store earnings before interest, tax, depreciation and amortization (EBITDA) was £3.4 million based on revenue of £8.2 million, according to the release.
Safestore operates 131 self-storage facilities, including 95 facilities it owns in the U.K. and 24 in France. Its wholly owned properties comprise more than 5 million square feet of storage space, while its entire portfolio serves approximately 49,000 customers.
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