SAFE

Resilient markets help the self-storage company resist the downturn

by Rachel Robson

Last week’s upbeat trading statement from self-storage firm Safestore (SAFE:AIM) suggests the shares are still worth holding on to, even though they have lost half their value over the past 18 months, falling from an all-time high of 259p to their current 135.8p.

Although the company is classed in the real estate sector, the self-storage market is seen to be more resilient, and revenue for the third quarter has increased by 10.3% to £21.3 million against the same period last year, and by 7% over the previous three months. Average rental rate has also remained strong, rising 12.8% compared with last year, and 3.1% over the second quarter.

Occupancy levels have slipped 0.5% from the same period a year ago, suggesting the £251 million cap has not remained entirely immune from the challenging economic environment. At least occupancy rose 1.5% against the second quarter, although the third quarter is traditionally the busiest.

Enquiries and new lets from customers moving home have slowed down in the UK during the third quarter, although the group points out those home movers taking space have been staying longer due to protracted house moving chains or their decision to sell before they buy. Enquiries and new lets from other types of customers needing space are said to have remained consistent with previous years. The group’s Paris business has seen a strong performance in occupancy growth and rates during the quarter.

Going forward, Safestore has warned the fourth quarter will be more challenging, no doubt partly because of the uncertain economic environment, but also because the fourth quarter is a seasonally weak trading period. Chief executive Steve Williams believes the firm is ‘well positioned to tackle this given our high-quality asset base and our focus on optimising rates per square foot by managing our space more effectively’.

Shares says: The next few months will be challenging, but the company continues to benefit from a solid business model. Hold