Shurgard Self Storage Limited · EURONEXT:SHUR
Shurgard Self Storage — FY2022 Earnings Presentation
44 slides from Shurgard Self Storage's earnings presentation, Feb 20, 2023
Slide 1: Europe's Leading Brand of Self-Storage Solutions
February 20, 2023 EUROPE’S LEADING BRAND OF SELF-STORAGE SOLUTIONS
Slide 2: Agenda
AGENDA 1. FY 2022 Performance and Strategy Review 2. Key Strategic & Operational Highlights 3. Financial Review and Guidance 4. Outlook and Medium-Term Guidance 5. Appendices
Slide 3: FY 2022 Performance and Strategy Review
1| FY 2022 PERFORMANCE AND STRATEGY REVIEW
Slide 4: Shurgard - Unique Platform and Runway
SHURGARD - UNIQUE PLATFORM AND RUNWAY • Overdelivered on our • Robust balance sheet, • Another year of 2022 development and disciplined capital outperformance M&A guidance allocation & returns • Proven benefits from • Strong development • Shurgard to become a UK geographic spread pipeline REIT from
Slide 5: FY 2022 Strong Execution and Growth
FY 2022 STRONG EXECUTION AND GROWTH 1.3m rentable sqm €142.7m invested in projects2 Sector sustainability leader +11.7% +149,300 sqm Property Operating €333.0m € 4.6 bn Revenue yoy growth1 36 projects c. 12% 5 star GRESB score with a leading Enterprise value3 of net rentable sqm score of 90 out of 1
Slide 6: Proven Model, Best in Class Self-Storage Platform
PROVEN MODEL, BEST IN CLASS SELF-STORAGE PLATFORM Supportive Customer Resilient Model Strong Branding Prop-Tech Platform Dynamics • 59 month average stay 90.5% +0.2pp #1 brand recognition2 Driving digital data • Increasing revenue through price Same store • 86% customers connecting via digital incre
Slide 7: Long Term Growth Prospects Unchanged
LONG TERM GROWTH PROSPECTS UNCHANGED Shurgard’s footprint spans the largest European markets – leading position in capital cities Industry fuelled by positive 2022 self storage area (sq ft. per capita) Self storage sq ft. per capita in structural drivers our 7 markets versus the US 1 Self Storage Ca
Slide 8: Successfully Implementing Our ESG Strategy
SUCCESSFULLY IMPLEMENTING OUR ESG STRATEGY ESG Priorities Strong Ratings Our Commitments Invest to reduce our carbon footprint Green certified buildings, LED, heat pumps, solar panels, Net Zero by 2030 water flow reduction (operational NZC) Strong ESG governance 13.2 Low Risk ISO-aligned EMS, ESG Co
Slide 9: Key Strategic & Operational Highlights
2| KEY STRATEGIC & OPERATIONAL HIGHLIGHTS
Slide 10: Unique Prime Portfolio
UNIQUE PRIME PORTFOLIO Focus on capital cities and major cities • Markets chosen for their demographics and urban density 266 • 93% of properties are located in capital and major cities stores across 7 countries1 • Growth focused on residential housing and commercial mobility • Accelerated strategy
Slide 11: Highest Occupancy Rates in Europe
HIGHEST OCCUPANCY RATES IN EUROPE Strong average same store 1 occupancy growth… Strong Occupancy growth 90,4% 90,5% • Average same store occupancy rate rising 2.5pp over the last 3 years 88,9% • 10 year all store average occupancy rate 86%, highly resilient through crises 88,0% • Trends towards long
Slide 12: Strong Rental Growth Across All Markets
STRONG RENTAL GROWTH ACROSS ALL MARKETS Same store average in-place rent by country (€ at CER per sqm/year) Rental Growth 2022 2021 350 +12.3% • Portfolio average +8.9% YoY growth in Same Store Average In-Place Rent 330 310 • UK saw the largest increase this year at +12.3% 290 +10.2% 270 +7.3% • Dig
Slide 13: Optimized Digital Platform
OPTIMIZED DIGITAL PLATFORM Enhancing the customer proposition… …while driving margin expansion Web Leads & Mobile Share 160.000 80% Customer Centric Digitalization Better operating efficiency 140.000 70% • Improved customer service • Increased data for revenue 120.000 60% 100.000 50% management • Ac
Slide 14: 3 Levers to Accelerate Our Portfolio Expansion
3 LEVERS TO ACCELERATE OUR PORTFOLIO EXPANSION LEVER 1 LEVER 2 LEVER 3 Re-developments New Developments Market Consolidation (expand existing buildings) (purpose built and conversion) (bolt-on acquisitions) Invest €120 million p.a. to: Invest €50 million p.a. to: • Doubling our footprint in target m
Slide 15: Redevelopments: Leveraging Our Freeholds
REDEVELOPMENTS: LEVERAGING OUR FREEHOLDS LEVER 1 LEVER 2 LEVER 3 2022 2023 2024 1 building 4 buildings 4 buildings Total cost: Total cost: Total cost: €0.9 million €6.5 million €16.5 million • 94% freehold portfolio Total additional Total additional Total additional sqm: 967 sqm: 10,817 BEFORE REDEV
Slide 16: New Developments: Key Growth Lever
NEW DEVELOPMENTS: KEY GROWTH LEVER LEVER 1 LEVER 2 LEVER 3 Typical process UK – FR – DE – NL: From agreement with seller on price Average lead time + 6 months for CPA (conditional purchase agreement) of 2-3 years + 6-9 months for building permit incl. judicial period + 12 months for construction Obj
Slide 17: Market Consolidation: Our Targeted Approach
MARKET CONSOLIDATION: OUR TARGETED APPROACH LEVER 1 LEVER 2 LEVER 3 Unique & Disciplined 2022 2022 …targeting a fragmented market with multiple opportunities M&A Strategy… objectives achievements FOCUS AREA 59 “ BOLT ON” Large & ACQUIRED STORES Small Medium Transformational 6 STORES P.A. 7 STORES AC
Slide 18: Significant and Strong Short-Term Pipeline (2022-2025)
SIGNIFICANT AND STRONG SHORT-TERM PIPELINE (2022 –2025) Figures listed in net sqm (000,s) total +149.3 A flexible and low risk growth plan Netherlands 6,7 24,6 10,0 +41.3 • Pipeline (acquired, developed, under construction or signed) Germany 3,9 35,4 +39.3 represents: - 149,300 sqm UK 3,4 21,5 2,5 +
Slide 19: Sustainability at the Core of Our Buildings Lifecycle
SUSTAINABILITY AT THE CORE OF OUR BUILDINGS LIFECYCLE Other Investments ISO 14001 aligned EMS, Building Management Systems (BMS): sensors, computers, … Customer experience Lobbies protection Access control Improved CCTV Reduce electricity and Access via App gas consumption LED lighting Heating optim
Slide 20: Commitment to Our Stakeholders
COMMITMENT TO OUR STAKEHOLDERS Social Governance Board Diversity Focused on Employee 6+ Global charity ESG is in our DNA Welfare partners • ESG commitment is driven 55% • 4.7/5.0 Glassdoor review 9 Board 33% from the Board and the CEO members score throughout the organization 66% • Growing a diverse
Slide 21: Financial Review and Guidance
3| FINANCIAL REVIEW AND GUIDANCE
Slide 22: Income Statement
INCOME STATEMENT QTD DECEMBER YTD DECEMBER In € millions (except Adj. Epra % earnings per share) 2022 2021 % var. 2022 2021 % var. % var.CER var.CER At actual exchange rate REAL ESTATE OPERATING 335.3 300.4 11.6% 12.3% 88.7 79.4 11.7% 13.5% REVENUE Real estate operating expenses (27.7) (26.4) 4.8% 1
Slide 23: Same Store Property Operating Revenue
SAME STORE1 PROPERTY OPERATING REVENUE In € millions QTD DECEMBER YTD DECEMBER (at actual exchange rate) % % 2022 2021 % var. 2022 2021 % var. var.CER var.CER France 20.0 18.9 5.6% 5.6% 77.5 72.9 6.3% 6.3% The Netherlands 17.5 15.8 10.8% 10.8% 66.8 61.1 9.4% 9.4% UK 14.1 13.2 6.8% 9.5% 55.2 49.1 12.
Slide 24: 2022 NOI Evolution
2022 NOI EVOLUTION FY 2021 ⎯ FY 2022 NOI1 bridge (€m) NOI margin improvement: +1.0pp NOI growth (at CER): +13.6% NOI growth: +12.8% Linked to SEK partially countered by GBP 3.4 2.3 (1.4) 219.2 20.5 194.4 Ramp-up phase Acquisition of six stores in September - October 2021 Opex under control
Slide 25: Cash Flow
CASH FLOW In € millions FY 2022 FY 2021 % var At actual exchange rate Cash: beginning balance 219.2 103.0 112.8% TOTAL CASH FROM OPERATIONS 186.5 161.6 15.4% €87.3m Acquisitions -76.5 -47.3 61.6% Net Cash as of December 2022 Developments, redevelopments and other -94.2 -66.5 41.6% Other capex -13.3
Slide 26: Balance Sheet
BALANCE SHEET In € millions At actual exchange rate Dec 2022 Dec 2021 % var. Investment Property 4,523.8 3,847.1 Other Assets1 30.0 19.9 €800m 2.36% 5.4 years 100% USPP indebtness Weighted average Weighted average Trade and other receivables 18.7 16.4 No encumbered assets interest rate maturity Cash
Slide 27: Outlook & Medium-Term Guidance
4| OUTLOOK & MEDIUM-TERM GUIDANCE
Slide 28: 2023 Outlook
2023 OUTLOOK • Total store revenue growth above 8% versus 2022; • NOI margin growth 0.2pp for all stores; • For all investment decisions taken as from 2023, increasing property yield to c. 8-9% at maturity (from c. 7-8%); • Average effective tax rate expected to be 18% (based on Adj. EPRA earnings b
Slide 29: Medium Term Guidance
MEDIUM TERM GUIDANCE • c. 6% growth p.a. for all store revenue; • 0.2pp NOI margin growth per year for all stores; • As of 2024, we plan to add c. 90,000 sqm per year; • Property yield c. 8-9% at maturity; • LTV at c. 25% and 4.0x to 5.0x Net debt/ EBITDA, with a short- to mid-term maximum of 35% or
Slide 30: Conclusion
CONCLUSION Strong business model & Large pipeline for unique platform future growth Diversified asset base and prime locations 3 Levers of growth Resilience of our business model Extensive development pipeline Investments in value creating opportunities Investing €170m per year, +90,000 sqm from 202
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Slide 32: Appendices
5| APPENDICES
Slide 33: Key Patterns: Same Across Countries
KEY PATTERNS: SAME ACROSS COUNTRIES What is self storage Why do they need self storage? Where are they? for our customers? “My attic or basement in a remote location” • Life events (birth, death, divorce, mobility) Close property catchment areas • Short distance catchment combined with • 10min drive
Slide 34: Store Portfolio Segmentation
STORE PORTFOLIO SEGMENTATION STORE PORTFOLIO SEGMENTATION # OF STORES Stores developed by Shurgard in operation for more 2017 2018 2019 2020 2021 2022 than three full years as of January, 1st Same-stores Stores acquired by Shurgard in operation for more than one full year as of January, 1st 213
Slide 35: All Store Revenue Growth: 2018 to 2022 Actuals
ALL STORE REVENUE GROWTH: 2018 TO 2022 ACTUALS All Stores: Quarterly YoY Growth All Stores: Yearly YoY Growth 14% 12% 12% 10% 10% 8% 8% 6% 6% 4% 4% 2% 2% 0% 2018 2019 2020 2021 2022 0% 2018 2019 2020 2021 2022 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22
Slide 36: Same Store Revenue Growth: 2018 to 2022 Actuals
SAME STORE REVENUE GROWTH: 2018 TO 2022 ACTUALS Same Stores: Quarterly YoY Growth Same Stores: Yearly YoY Growth 10% 12% 9% 10% 8% 7% 8% 6% 6% 5% 4% 4% 3% 2% 2% 1% 0% 2018 2019 2020 2021 2022 0% 2018 2019 2020 2021 2022 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21
Slide 37: Customer Dynamics
32 33 34 35 36 37 38 39 40 41 42 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 CUSTOMER DYNAMICS Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Average length of stay (months) Feb-21 Mar-21 SHARE OF LONG-TERM CUSTOMERS
Slide 38: Same Store Average Occupancy by Country
SAME STORE AVERAGE OCCUPANCY BY COUNTRY QTD DECEMBER YTD DECEMBER 2022 2021 Diff. 2022 2021 Diff. France 89.0% 89.6% -0.6pp 89.2% 89.2% 0.0pp The Netherlands 91.1% 90.2% 1.0pp 90.7% 90.1% 0.6pp UK 88.7% 89.9% -1.2pp 88.8% 89.2% -0.3pp Sweden 91.1% 91.9% -0.8pp 91.7% 92.2% -0.5pp Germany 91.4% 91.6%
Slide 39: Same Store Property Average In-Place Rent by Country
SAME STORE PROPERTY AVERAGE IN-PLACE RENT BY COUNTRY In € per sqm/year QTD DECEMBER YTD DECEMBER % % 2022 2021 % var. 2022 2021 % var. var.CER var.CER France 272.4 253.7 7.4% 7.4% 262.1 244.2 7.3% 7.3% The Netherlands 226.5 205.5 10.2% 10.2% 216.9 199.7 8.6% 8.6% UK 347.1 317.4 9.4% 12.1% 336.6 297.
Slide 40: Occupancy Ramp Up: 2015 to Current Developments
OCCUPANCY RAMP UP : 2015 TO CURRENT DEVELOPMENTS STRONG OCCUPANCY UPLIFT ON OUR DEVELOPMENTS 40
Slide 41: Example of Our Strategy in London
EXAMPLE OF OUR STRATEGY IN LONDON: (M25) 2014-2022 Number of stores 2014: 17 2014 pool 1 2022: 38 2014 pool 4 9 12 x 2.2 (+11% CAGR) Sqm rentable 2014: 76.4 2014 pool (in sqm '000) 2022: 189.1 2014 pool 7 68 37 x 2.5 (+12% CAGR) Rented sqm 2014: 69.5 2014 pool (in sqm '000) 2022: 162.8 2014 pool 6 5
Slide 42: NTA, LTV, Net Debt/EBITDA, ICR Evolution Since IPO
NTA, LTV, NET DEBT/ EBITDA, ICR EVOLUTION SINCE IPO (OCT 2018) At actual exchange rate LOAN-TO-VALUE (LTV) 18,0% 17,4% 18,1% 16,9% 13,9% 2022 2021 2020 2019 2018 +69.5% versus 2018 (CAGR 4%) +4.1pp versus 2018 +1.6x versus 2018 +2.3x versus 2018 STRONG GROWTH OF OUR TANGIBLE ASSETS AND CONSERVATIVE
Slide 43: Shurgard to Become a UK REIT
SHURGARD TO BECOME A UK REIT • Shurgard Self Storage Limited will become a UK REIT in March 2023; • The Group’s shares will continue to be listed and traded on Euronext Brussels, with strong governance and financial reporting obligations; • Exemption from UK corporation tax on rental profits and cap
Slide 44: Legal Disclaimer
LEGAL DISCLAIMER All statements in this presentation, other than statements of historical facts, are forward-looking statements. These statements are based on the current expectations and views of future events and developments of the management of Shurgard and are naturally subject to uncertainty a