Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Shurgard Self Storage Ltd (XBRU:SHUR, Financial) reported a strong revenue growth of 16% year-on-year in Q3 2024, driven by portfolio expansion in the UK and acquisitions in Germany.
- The company achieved a high average same store occupancy rate of 89.8%, with a slight increase from the previous year.
- Shurgard's same store NOI and margin improved to 66.7%, reflecting the positive impact of digitalization initiatives on cost structure.
- The company has a robust development pipeline, with plans to deliver over 405,000 square meters of new capacity by 2026, representing a significant investment of EUR1.2 billion.
- Shurgard successfully integrated the LokânStore acquisition, increasing occupancy from 67% to 69.2% within two months, and expects it to be earnings neutral in 2024.
Negative Points
- Shurgard's earnings per share remained stable due to the dilution effect of a 9% increase in new shares from a November 2023 equity raise.
- The company's net debt to underlying EBITDA ratio is currently above the medium-term guidance of 4 to 5 times, due to the acquisition of an immature portfolio.
- Interest expenses have increased due to local store bridge financing, impacting overall financial performance.
- The NOI margin is expected to be slightly below last year, primarily due to the low occupancy and ramp-up phase of the LokânStore acquisition.
- There is a need for continued focus on managing leverage and financing costs, especially with the significant CapEx requirements for the development pipeline.
Q & A Highlights
Q: Can you provide more details on the earnings per share guidance for this year compared to last year, considering LokânStore's impact?
A: Jean Kreusch, CFO: We expect earnings per share to be slightly below last year due to the dilution from the equity raise in November. However, we are aiming to align with the consensus prior to the LokânStore acquisition.
Q: How do you see the same store revenue growth trends extending into the fourth quarter?
A: Marc Oursin, CEO: The trends for the first weeks of Q4 are positive and in line with previous quarters, indicating stable growth.
Q: With your recent acquisitions, how does your current capital structure affect your appetite for further M&A?
A: Marc Oursin, CEO: Our LTV is between 24% and 25%, and we aim to keep net debt to EBITDA below 5 times. We have capacity for acquisitions that align with these guidelines.
Q: Regarding the LokânStore acquisition, is the current occupancy rate of 69.2% in line with your expectations?
A: Marc Oursin, CEO: Yes, we started at 67% and aim to reach 90% by December 2026, requiring a monthly occupancy gain of less than 1%.
Q: Can you elaborate on the impact of refinancing on LokânStore's earnings neutrality?
A: Thomas Oversberg, Group Finance Director: The refinancing had a significant positive impact, and the performance of LokânStore has also been better than anticipated.
Q: What is your strategy regarding third-party management following recent acquisitions?
A: Marc Oursin, CEO: We are assessing the situation with our partners and will provide a more detailed strategy by the end of February.
Q: How do you view the opportunities in the investment market and your acquisition pipeline?
A: Marc Oursin, CEO: We expect more portfolio opportunities due to industry maturity and are optimistic about maintaining a decent level of activity in the next 12 months.
Q: Can you confirm your CapEx plans for the pipeline and acquisitions in 2025?
A: Marc Oursin, CEO: We have secured EUR150 million for organic growth in 2025, with an additional EUR50 million assumed for M&A, totaling around EUR200 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
