Safestore H1 2025 Earnings Report

Safestore EPS Results

• Actual EPS: GBX 18.60
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Safestore Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Safestore Announcement Details

• Quarter: H1 2025
• Date: 6/10/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, June 10, 2025
• Conference Call Time: 4:30AM ET

Safestore (LON:SAFE) is the UK's largest self storage group with 190 stores on 31 October 2023, comprising 133 wholly owned stores in the UK (including 73 in London and the South East with the remainder in key metropolitan areas such as Manchester, Birmingham, Glasgow, Edinburgh, Liverpool, Sheffield, Leeds, Newcastle, and Bristol), 29 wholly owned stores in the Paris region, 11 stores in Spain, 11 stores in the Netherlands and 6 stores in Belgium. In addition, the Group operates 7 stores in Germany under a Joint Venture agreement with Carlyle. Safestore operates more self storage sites inside the M25 and in central Paris than any competitor providing more proximity to customers in the wealthiest and more densely populated UK and French markets. Safestore was founded in the UK in 1998. It acquired the French business "Une Pièce en Plus" ("UPP") in 2004 which was founded in 1998 by the current Safestore Group CEO Frederic Vecchioli. Safestore has been listed on the London Stock Exchange since 2007. It entered the FTSE 250 index in October 2015. The Group provides storage to around 90,000 personal and business customers. As of 31 October 2023, Safestore had a maximum lettable area ("MLA") of 8.090 million sq ft (excluding the expansion pipeline stores) of which 6.231 million sq ft was occupied. Safestore employs around 750 people in the UK, Paris, Spain, the Netherlands, and Belgium.

Safestore H1 2025 Earnings Call Transcript

Key Takeaways

• Group like-for-like revenue rose 2.8% (UK +1.6%, Paris +0.8%, expansion +17%), with occupancy up to 78.2% and RevPAR increasing 2.3%.
• Underlying EBITDA fell 1.5% year-on-year due to inflationary cost pressures and new store investment, though planned cost actions will save £3–4m next year.
• Opened 10 new stores in H1 and 4 more in H2, and with 16 stores in development for 2026+, the pipeline is expected to deliver CHF35–40m of incremental EBITDA.
• Maintained a strong balance sheet with CHF1bn net debt, 27% loan-to-value, average debt cost down to 3.6%, no maturities until October 2026, and interim dividend up 1% to 10.1p.
• Converted 93,000 sq ft of large business units to smaller domestic units (with 5 million sq ft planned), capturing rates 73% higher per sq ft to boost margins.

Presentation

[Frederic Vecchioli, CEO at Safestore Holdings]

Good morning, everyone, and thank you for joining us for Safestore's Half Year Results. I'm here with our group CFO, Simon Clinton. Quick run through agenda. I'll give an overview of where we are and how we have performed. Simon will take you through the detailed numbers, and then I'll talk you through the SafeStore opportunity we see from here before opening up to your questions.

[Frederic Vecchioli, CEO at Safestore Holdings]

The slide is a reminder that we operate in a growing market, and SafeStore is a strong and growing business. The Safe Storage market we operate in has strong fundamentals with limited supply and growing demand. Our business model is super attractive. Our platform is scalable and generates high levels of EBITDA and cash. And of course, we are developing a pipeline of new stores that will be the foundation of growth in the future.

[Frederic Vecchioli, CEO at Safestore Holdings]

The next slide is a great demonstration of what our business model achieves. We've built a strong track record over the past decade. You can read the numbers in details for yourself, but it is important to flag that over the last twelve years, adjusted EPS is up nearly 300% and we have returned CHF 500,000,000 of dividends to shareholders. I'm immensely proud of the team for helping achieving this. We believe in our robust and I'm confident that we can continue this journey of growth.

[Frederic Vecchioli, CEO at Safestore Holdings]

Now turning to the first half of twenty twenty five. Overall, it was a solid performance. Revenue grew 4% at constant Forex with like for like numbers improving. Our expansion markets led the way with 17% growth, and our more mature portfolio in The UK and Paris were up 1.60.8% like for like, respectively. Occupancy ticked up to 78.2% and storage rates are improving with RevPAR up 2.3%.

[Frederic Vecchioli, CEO at Safestore Holdings]

Our total lettable area is now over 9,100,000 square feet, which is an 11% increase. EBITDA was down slightly, about 1%, mostly due to inflation and planned investments in new stores. Importantly, we've taken cost actions to mitigate this, which will reduce next year's total cost by GBP 3,000,000 to GBP 4,000,000 compared to what they would otherwise. In December, we took another big step forward by partnering with Nuveen to acquire EZBOX in Italy, expanding our European footprint even further. Looking ahead, the pipeline is active.

[Frederic Vecchioli, CEO at Safestore Holdings]

We've already opened 10 new stores this year, with four more in the and 16 in development for 2026 and beyond. Together, they'll play a big part in hitting our CHF35 million to CHF40 million EBITDA growth target. And financially, we remain in good shape with CHF1 billion in net debt, a steady 27% loan to value and the firepower to keep investing in growth. In line with our progressive dividend policy and reflecting the Board's confidence in our cash flows, we have increased the interim dividend 1% to 10.1p per share. Let's now, in the next slide, take a closer look at the trading dynamics in the The key takeaway here is that we've seen encouraging momentum across the portfolio.

[Frederic Vecchioli, CEO at Safestore Holdings]

In The UK, growth continues to be driven by strong domestic demand. Like for like revenue has been on a steadily improving path and that's backed up by a 2.1% year on year increase in enquiries and a 6.6% like for like rise in occupied domestic space, which is helping to offset a decline in business related demand. New stores or non like for like stores are playing their part too, contributing £1,100,000 in revenue during the first half. Q2 saw stronger performance than Q1, though some of that was driven by timing factors. March was stronger with demand pulled forward by consumers aiming to complete housing transactions before the April stamp duty rise, and Easter was much later this year.

[Frederic Vecchioli, CEO at Safestore Holdings]

Importantly, the combined March and April volumes were up 2.5% versus 2024 and trading in May was positive on a total and on a like for like basis. The early signs from June are also encouraging. Picking up on the business demand, we are deliberately shifting our mix towards domestic customers. As business customers vacate large units, we are converting them to smaller ones to better suit domestic customers. In the half, we converted 93,000 square feet, and we plan to repurpose 5,000,000 square feet, about 50% of the total.

[Frederic Vecchioli, CEO at Safestore Holdings]

The rationale for doing so is very clear. The average rate we achieve for smaller units is 73% higher than for units over 200 square feet. So this shift does not just respond to demand, it also improved margins. Turning to Paris, the business delivered another robust performance. We saw rental rates continue to increase, though this was slightly offset by a small dip occupancy.

[Frederic Vecchioli, CEO at Safestore Holdings]

And in our expansion market, that's Spain, The Netherlands and Belgium, we continue to see strong like for like growth. Indeed, for like revenue was up 17% and sites are maturing well. All in all, this was a solid first half with performance underpinned by strong fundamentals, local execution and strategic delivery across all our geographies. I now hand over to Simon for an overview of the latest financials.

[Simon Clinton, CFO at Safestore Holdings]

Thank you, Fredrik, and good morning, everyone. I'm going to start with our trading performance. Overall, group like for like revenue increased 2.8% with growth across all of our markets. In The UK, like for like revenue growth of 1.6% reflects a continuation of the improving trajectory we have seen over the last year and was delivered with increases in both average rate and occupancy. We had steady growth of 0.8% in Paris, and like for like revenue in expansion markets grew 17%, with strong growth in each of the countries included in the segment.

[Simon Clinton, CFO at Safestore Holdings]

The performance was supported by strong ancillary revenue growth in all of our markets, driven by our dedicated store teams working to support our customers with their needs. Including the contribution of new and non like for like stores, revenue grew 3.3%, 4% at constant exchange rates. Underlying EBITDA at £66,000,000 was 1.5% lower than last year. And to break this down, for like for like stores, we saw a 1,100,000 increase year on year in store EBITDA, with the revenue growth partially offset by inflationary increases in store staff costs and business rates in particular in The UK. Non like for like stores provided a headwind to EBITDA as expected due to the normal phasing of occupancy increases versus a fixed cost base in new stores, leading to a half million pound decrease in store EBITDA against last year.

[Simon Clinton, CFO at Safestore Holdings]

Lastly, administrative costs were up £1,900,000 year on year at constant exchange rates, and I'll come back to this shortly. The other key cost line, finance charges, saw a £3,300,000 increase year on year to £13,000,000, reflecting increases in borrowings to finance our new store development program and our Italian joint venture purchase. Overall, EPRA basic earnings of £40,600,000 give us a diluted EPRA EPS of 19p per share. Let's take a closer look at the cost picture. Underlying cost of sales on a like for like constant exchange rate basis increased 5.2% year on year in the first half.

[Simon Clinton, CFO at Safestore Holdings]

The key elements of this increase were the inflation driven rises in The UK business rates and employee costs due to rises in national living wage. In overall cost of sales, non like for like and new store developments at an incremental £2,000,000 of costs year on year, reflecting the expansion of the portfolio. Underlying administrative costs increased 1,900,000 year on year. There are a couple of key things behind this. Firstly, we have reflected a return to normal levels of staff incentives and variable pay with encouraging trading performance and with our cost base reflecting anticipated inflationary increases and impact of development program.

[Simon Clinton, CFO at Safestore Holdings]

Secondly, we continue to be very disciplined in where we choose to deploy capital. In the half, we've decided not to proceed with some sites, preferring instead to allocate capital to more highly accreting projects. As a result, we've had to write off the preliminary costs associated with these sites. As a group, we have a strong focus on cost control and have a number of initiatives underway, including sharing the benefits with insurers from reduced claims, using technology to enable a restructuring of our call center, and changing our electricity procurement, including through the use of photovoltaics. We expect to see the benefits of these coming through in the half and into next year.

[Simon Clinton, CFO at Safestore Holdings]

From a cash perspective, we continue to be strongly generating with £60,000,000 of operating cash flow in line with last year. Free cash flow, which included the impacts of high interest payments from additional borrowings to finance our development program, was slightly lower year on year at £36,000,000. In the half, we invested £58,000,000 in our store development program with an additional £37,000,000 for the investment in our new Italian joint venture. Our development activity was primarily financed through new borrowings, including the €70,000,000 USPP, which we issued in q one. With this issuance, we have a healthy debt profile with staggered maturities out to 02/1933.

[Simon Clinton, CFO at Safestore Holdings]

We have no debt maturing before the October 2026. We maintain strong debt metrics with loan to value at 27% and an interest cover ratio just shy of four times. Overall, we have just over half our debt attracting fixed rates of interest, which means that we are able to take advantage of falling base rates on our floating rate debt. In addition, we have actively managed our mix of borrowing currencies. With our assets in Paris and expansion markets, we have significant euro denominated asset base, which gives us comfort in borrowing in euros and so benefiting from significantly lower base rates in that currency.

[Simon Clinton, CFO at Safestore Holdings]

These two elements combined has meant that the average cost of debt at the close of the half fell to 3.6%. As a result, we are now expecting our interest cost to be £5,000,000 to £6,000,000 higher than in FY 2024, reflecting the additional borrowings for our developments and Italian investment. Our EPRA net tangible assets increased 2% from the year end to £11.17 per share. The valuation of our same store portfolio was broadly flat over the half, reflecting a consistent exit yield at 5.2% from a stable investment market. For the portfolio, the valuation uplift of £55,000,000 came from the value created through our development program.

[Simon Clinton, CFO at Safestore Holdings]

Looking forward, the CapEx for our development program is expected to total an additional £116,000,000, of which around £44,000,000 is projected for the second half of this year. We have announced a 1% increase in the interim dividend, reflecting our confidence in the business and in line with our dividend policy. And with that, I will hand back to Frederic.

[Frederic Vecchioli, CEO at Safestore Holdings]

Thank you, Simon. Let's begin the next section with an overview of what makes Sestor a compelling growth story. This slide sets the stage by showing the four key areas that contribute to long term revenue and earnings growth. The two elements are the significant EBITDA potential from driving revenue growth from our like for like and our newer like for like stores. The driver comes from developing the pipeline.

[Frederic Vecchioli, CEO at Safestore Holdings]

And the final element is the potential from additional JVs or other corporate activity we can put through our existing platform. I'll speak in turn about these elements on the next few slides. On the demand side of the equation, these slides highlight why the self storage sector, and C Store in particular, continues to enjoy strong momentum. And that is because we are seeing consistent growth in enquiries across all our geographies. The drivers of demand are broad based.

[Frederic Vecchioli, CEO at Safestore Holdings]

On the domestic side, there are life events such as moving house, family changes and lifestyle shifts like remote working and decluttering. On the business side, demand is coming from SMEs and larger corporates, syncing flexible short term storage solutions to support dynamic operations. Market penetration remains low, especially domestic usage, meaning there is considerable headroom for growth. And while economic cycles may cause short term fluctuations, the long term trajectory is one of steady adoption of self storage as a consumer service. A great example is that we see 72% more inquiries for stores opened in 2013 than we did then, a striking figure that speaks for the growth in awareness and adoption of self storage.

[Frederic Vecchioli, CEO at Safestore Holdings]

Importantly, Sefter is well positioned to capture these demands through our technology, platform and digital marketing capabilities. This allows us to generate and convert inquiries more effectively than most peers, and I will speak to this in more detail later on. This slide looks at the supply side of the equation, and again, the story is highly supportive of our long term growth outlook. These graphs clearly illustrate that safe storage remains undersupplied across Europe compared to The US. And while we don't expect Europe to reach US level, the direction of travel is clear.

[Frederic Vecchioli, CEO at Safestore Holdings]

Awareness is rising, driven by increased supply. While new supply is entering the market, it's doing so from a very low base and often not in the locations where our presence is the highest. As more people discover and use the service, awareness grows, fueling a virtuous circle that drives further demand. This is a significant growth opportunity, not just in UK, but also across Europe and especially in the major metropolitan areas where CefStor has a strong presence. These areas benefit from natural barriers to entry that support occupancy, pricing and reduces the risk of overcapacity.

[Frederic Vecchioli, CEO at Safestore Holdings]

It is hard for new entrants to add significant new space due to planning constraints, high land costs and limited suitable sites. The supply demand dynamic creates a strong tailwind for existing operators like Septo, who already have operational scale and market recognition in place. So the takeaway here is simple, structural undersupply, combined with growing demand and high barriers to entry in key markets, positions us extremely well for continued growth. Now let's look at our geographic footprint and what it means for our strategy. Sefto is now present in seven European countries and more than 95% of our sites are located in key metropolitan areas.

[Frederic Vecchioli, CEO at Safestore Holdings]

That's intentional. As I've just mentioned, urban centers offer the highest and most resilient demand along with the strongest pricing power and the greatest buyer to entry. In The UK and Paris, our two largest markets, we have a deep presence and a strong brand. These markets are highly cash generative and we continue to see growth both from maturing stores and from carefully selected new sites. In our expansion markets, we are building scale quickly in relatively early stage markets where we are mover advantage.

[Frederic Vecchioli, CEO at Safestore Holdings]

What's powerful about our platform is that it allows us to grow at group level without replicating cost structure in every country. This means that each new market can scale more quickly and more efficiently, driving faster returns on investments. Joint ventures will play a key role in our expansion strategy. They allow us to extend our reach without overextending our capital, and they give us access to a broader range of acquisition opportunities. With our in house property team providing underground expertise, we're able to act quickly and with confidence when opportunities arise.

[Frederic Vecchioli, CEO at Safestore Holdings]

In short, our Pan European footprint gives us the scale, diversification and strategic optionality to grow faster, smarter and with greater resilience. Finally, these slides bring together two of our biggest strengths, our technology platform and our in store execution. From a digital standpoint, we built a scalable multichannel platform that drives leads, capture inquiries and convert customers efficiently. Our website is SEO optimized and integrated with back support, lead tracking and conversion. We manage customers online, in stores and via national accounts, giving us multiple paths to revenue and higher conversion rates.

[Frederic Vecchioli, CEO at Safestore Holdings]

Our use of data also sets us apart. We have a rich dataset of over 2,000,000 historic contracts and we combine that with real time demand signals to manage pricing and inventory dynamically. This allows us to price intelligently at a hyper local level based on seasonality, occupancy, unit type, and demand trends. But technology alone isn't enough. What really makes a difference is how it's paired with outstanding in store teams.

[Frederic Vecchioli, CEO at Safestore Holdings]

Our store managers and staff are trained not just to serve, but to sell, to guide customers to the right product and to optimize conversion. They are incentivized to drive revenues through new lets, rate management and ancillary services. These human elements add depth and responsiveness that no digital system can replicate on its own. We're also seeing strategic benefits from the growth of our domestic customer base. These customers typically prefer smaller units, which, as I discussed in my introduction, command higher rates per square foot.

[Frederic Vecchioli, CEO at Safestore Holdings]

As this segment grows, it supports average rate growth and contributes positively to Ref Path. In essence, our operating model is about more than just filling space. It's about doing so intelligently, profitably and sustainably, and it's this combination of technology and talent that allows us to do it better than anyone The next slide brings us to one of the most critical levers of our financial model, RevPAR or revenue per available square foot. This is a core metric that encapsulates how effectively we are monetizing our existing storage

[Frederic Vecchioli, CEO at Safestore Holdings]

Rather than looking at occupancy or rate in isolation, RevParf captures a combined effect of both plus ancillary sales, giving us a clearer picture of how well our pricing and utilization strategies are working together. The upward trajectory we've seen in LifePath over recent years is encouraging. It demonstrates the power of our centralized revenue management tools, which allow us to optimize pricing by location, unit size, and customer profile in real time. And that's supported by our data infrastructure, allowing us to respond quickly to shifts in market behavior. So in summary, Refpath is growing not because of any single action, but due to a set of integrated strategies, digital optimization, store team empowerment, smarter pricing tools and a favorable shift in customer behavior.

[Frederic Vecchioli, CEO at Safestore Holdings]

Now let's turn to growth, specifically our development pipeline. This is where we are building the next phase of sales force earnings and value creation. We currently have a development program that represents a 13% uplift in our MLA, or maximum lettable area, that equates to around 1,100,000 square feet of new space being delivered over the next couple of years. The quality and location of these sites are as important as the volume. Around 60% of this pipeline is concentrated in London and Paris, our two most established and supply constrained markets.

[Frederic Vecchioli, CEO at Safestore Holdings]

These are cities where barriers to entry are high and where we already have operational scale. The remaining 30% of the pipeline in our expansion markets are markets where consumer awareness of self storage is growing and where we have already established a strong foothold. All of this is backed by a disciplined capital allocation framework. Every new store is under a return with a clear view on returns, and our experience in both mature and emerging markets allows us to model ramp up curves with a high degree of confidence. These are not speculative projects.

[Frederic Vecchioli, CEO at Safestore Holdings]

They are tightly aligned with our proven approach to site selection, fit out and marketing, and they are rolled out with marginal increase in overhead. This keeps our cost to launch low and our speed to market high. So taken together, this pipeline represents a well calibrated runway of revenue and EBITDA growth over the next few years. It reinforces our conviction that the SafeStore model is scalable, repeatable and increasingly efficient as we grow. Now let's talk about what happens once those new stores come online.

[Frederic Vecchioli, CEO at Safestore Holdings]

This slide is about the economics of maturity, our cash on cash returns and how our investment in new stores convert into meaningful returns over time. We track each new development against a cash on cash return profile and you can see this cumulatively on the graph on the left. In year one, stores tend to begin modestly, EBITDA negative or barely breakeven, but they ramp steadily over a three to five year period. This ramp up reflects the time it takes to build local awareness, establish customer flow and optimize pricing and unit mix. This ramp up is not just theoretical.

[Frederic Vecchioli, CEO at Safestore Holdings]

We are seeing it play out in the current portfolio. Our pipeline and non like for like stores, those less than two years old, are projected to deliver an additional CHF35 million to CHF40 million of EBITDA once stabilized. In the year, new store openings are a drag to profit simply because costs come in before revenues build, but this is temporary. Once occupancy scales and the stores move into operational efficiency, it becomes highly accretive. Based on our current million CapEx program, we are confident these new assets will generate return well in excess of our cost of capital.

[Frederic Vecchioli, CEO at Safestore Holdings]

On the right hand chart, you can see the updated chart that reflects the natural evolution of stores moving from non like for like to like for like from 2023. In essence, these slides illustrate the power of disciplined growth. We are not just adding stores, are adding value on a time tested and data backed up ramp up curve that turns short term investment into long term earnings growth. The next slide serves as a quick recap of everything we've covered, distilling the SAFTORE opportunity into its most essential components. What you see in the chart is a demonstration of the powerful compounding effect that occurs as stores move from non like for like to maturing and then to mature status.

[Frederic Vecchioli, CEO at Safestore Holdings]

Mature stores continue to deliver steady like for like revenue growth, supported by stable occupancy and optimized pricing. Maturing stores, on the other hand, typically show a faster growth trajectory as they build occupancy and refine their pricing strategies. Our newest stores are ramping up in line with expectations. The chart clearly demonstrates just how powerful a small increase in revenue growth can be in our maturing stores. A modest increase from 3% to 4% sales growth drives a significantly higher EBITDA contribution, thanks to the high operating leverage in our model.

[Frederic Vecchioli, CEO at Safestore Holdings]

This dynamic underpins one of the most attractive features of our model, the ability to generate significant EBITDA growth without relying on external acquisitions or development. Because of our relatively fixed cost base, much of the incremental revenue flows straight to EBITDA, amplifying earnings as stores grow into their potential. This layered growth dynamic is what allows us to compound earnings year after year. We also have our pipeline of targeted investment to feed into our growth profile over the coming twenty four to thirty six months, and which we can bring online without putting under pressure on our balance sheet. Combine this with our structural advantages such as diversified presence across Europe, our strong digital and in store capabilities and a customer base that is shifting towards smaller, higher yielding domestic units, we believe all these elements support growth in Refpath, EBITDA and ultimately shareholder value.

[Frederic Vecchioli, CEO at Safestore Holdings]

So when we talk about the SAFTA opportunity, we are talking about a business with proven fundamentals, a scalable model and a very clear roadmap for continued value creation. It's not a story based on one off wins or cyclical tailwinds. It's built on consistent execution and strategic clarity. In short, these slides tell a story of a highly scalable, capital efficient growth model that's already delivering results and has plenty more room to run. To close, let's bring everything together.

[Frederic Vecchioli, CEO at Safestore Holdings]

We operate in a fundamentally attractive industry, and our pan European portfolio puts us in a unique position to benefit from the growth trends and supply demand imbalance in our market. We made good progress in the first half. Trading is improving in The UK and we have taken action on cost. As of mid June, current trends suggest a reasonable likelihood that Q3 trading revenue will continue to improve year over year, with UK maintaining the positive like for like sequential momentum. Financially, we remain disciplined.

[Frederic Vecchioli, CEO at Safestore Holdings]

With our strong balance sheets, we are funding and delivering our pipeline to plan, and we believe this will deliver CHF35 million to CHF40 million EBITDA, continuing a history of double digit on cash on cash returns. The valuation of our business has a strong underpin, with an EPRA NTA of £11.17 per share. Finally, it's important to add that we are not just a growth company, we are a compounding engine. Since 2013, we've only raised £130,000,000 of equity eleven years ago, but we've grown since our NAV from £300,000,000 to 2,300,000,000.0 and we've returned £500,000,000 to shareholders in dividends. Financial year 2025 guidance remains unchanged and we are confident in our ability to deliver another year of performance.

[Frederic Vecchioli, CEO at Safestore Holdings]

Thank you for your attention. Simon and I will now be happy to answer any questions you may

[Operator]

and ask your question. Our question comes from Samuel King. Samuel, please unmute and ask your question.

[Samuel King, VP - Real Estate Equity Research at BNP Paribas]

Hi, good morning, guys. I've got three questions, please. I'll ask them one by one. The is on admin expenses. And of the 25% increase, just interested what the split from variable pay and development write offs was.

[Samuel King, VP - Real Estate Equity Research at BNP Paribas]

Just trying to understand what the run rate looks like moving forward is presumably the increase from variable pay could be recurring, but the cost from development write offs is just a one off?

[Simon Clinton, CFO at Safestore Holdings]

Sam, yes, that's right. So the largest proportion of the increase year on year came from the normalization of variable pay for head office staff, the expectation as we normalize the business both in terms of meeting expectations with encouraging top line growth and with costs coming through as expected or maybe even a little bit better with the savings work we've been discussing. So yes, that would be a half one and a half two element. The write off of the preliminary costs associated with a couple of opportunities that we were looking at is really expected just to be a half one and that's in the order of magnitude of a few £100,000. So, yeah, I think we would expect the 25% to be substantially lower for the full year basis.

[Samuel King, VP - Real Estate Equity Research at BNP Paribas]

Okay. Thanks. That's helpful. And then a one on margin improvement. Can you give an indication of what the potential level of improvement is once all of the 500,000 square feet of conversions are completed?

[Samuel King, VP - Real Estate Equity Research at BNP Paribas]

Appreciate there are a few moving parts to that, but an indication of the impact of conversions alone would be helpful.

[Simon Clinton, CFO at Safestore Holdings]

Well, I guess the conversions are a form of the developments that we have. So I I think may maybe maybe the way to think about the margin side is if we think about where our like for like store margin is, which is 68% or so, our total portfolio store margin is 66%. So we've got a few percentage points of improvement from an overall portfolio perspective to come through as the stores fill up, which are on like for like.

[Samuel King, VP - Real Estate Equity Research at BNP Paribas]

Okay. Thank you. And then as the last one on the development pipeline. I noticed you've taken the numbers off the usual graph from Slide 23 that looks at the timing of earnings accretion from projects as they complete. But it looks like, just from eyeballing the chart, that the near term dilution has increased slightly again.

[Samuel King, VP - Real Estate Equity Research at BNP Paribas]

So just any comments around that would be helpful, please.

[Simon Clinton, CFO at Safestore Holdings]

Yeah. The the the key the key movement there is due to the change in the like for like classification. So the chart that we showed at year end used the the 2024 definition of like for like. The chart we're now showing needs to show the 2025 definition of like for like. So the 13 stores which we had included in non like for like at the end of last year because they were open in FY 2023 have now been classified as like for like.

[Simon Clinton, CFO at Safestore Holdings]

And so the benefits of the growth in earnings and that they deliver essentially will be coming through in the like for like part of the portfolio rather than in the non like for like and pipeline, which has been illustrated in this chart. And that's the key difference for the early years. We're expecting the overall picture to be broadly in line with with the numbers that we've been showing previously, though.

[Samuel King, VP - Real Estate Equity Research at BNP Paribas]

Okay. Got it. Thanks very much.

[Operator]

Thank you for your question, Samuel. Our next question comes from Chris Kelly. Chris, please unmute and ask your question.

[Analyst]

Okay. Yes. Thank you. I've just unmuted. I had two questions, if I may.

[Analyst]

Thank you very much, firstly, to, the executive team and the staff for the job that you're doing. These results look encouraging, although, obviously, challenging at the moment. The question is that the narrative is about expanding the portfolio in an inflationary economic environment. I just wondered, is it possible to stratify the portfolio to cut out any stores that might have unfavorable economic characteristics such as low occupancy or low rates or they're in the wrong location, not in a not in a profitable cluster, or any other operational problems so that that capital can be redeployed elsewhere.

[Simon Clinton, CFO at Safestore Holdings]

Chris, good to speak. I think if we look across our portfolio, we're really happy with all of our stores. So I don't think there's really any good reason to be doing that. I think our portfolio of our stores are all trading really well, and then we're happy with the very strong cash contribution they will give to the group.

[Analyst]

Okay. So you're saying they're all good. There's no underperformers. There's nothing to to filter out. Okay.

[Analyst]

The other question was, given the importance of the website and the technology platform, could you tell us a little bit more about what you're doing given the the problems we've had seen with Marks and Spencer in the co op recently to ensure that we're not gonna get any surprises on the cybersecurity front? And related to that, would it be possible to make a slightly bigger disclosure on that in the next annual report? So maybe if you could the part of that question is, are you doing anything differently in cybersecurity?

[Simon Clinton, CFO at Safestore Holdings]

Hi. Yeah. Chris, that's a really interesting one. And, obviously, cyber is the front of everybody's minds in all industries across well across The UK, but across the world really, and it is very central to our understanding of risk as a business. We are doubling down on our efforts in the normal way as everyone else is doing.

[Simon Clinton, CFO at Safestore Holdings]

And we are focused on this from a day to day perspective as well as making sure that we're making sure we've got the right strategic steps in place, to keep the business secure.

[Operator]

Thank you very much, Chris, for your question. Our next question comes from Aaron Guy. Aaron, if you could please unmute using star six seeing as you're coming in on a phone and ask your question.

[Aaron Guy, Real Estate Equity Analyst at Citi]

Yes. Good morning, chaps. Thanks for taking my questions. I've got three. I'll ask them individually if that's easier.

[Aaron Guy, Real Estate Equity Analyst at Citi]

Just in terms of the development pipeline, how are you thinking about the size of the development pipeline in sort of years, say, to five, given that it takes some time to sort of secure sites and prepare. Are we at sort of peak development now is at 19% of current space? Or do you want to sort of keep that run rate going? Do you think that should sort of moderate back a little bit from here? Just trying to sort of about where the development pipeline goes beyond the existing pipeline.

[Simon Clinton, CFO at Safestore Holdings]

So I think the way we think about it is clearly the developments that we have are highly accretive. They add a lot of value to the business and you can see that through the increase in the portfolio valuation that's happened at half year, which is being driven by the successful completion of developments. And we think that there are a number of super attractive opportunities throughout Europe and using the benefits of the scale that we have and the presence we have in numerous markets to find really highly accretive opportunities. Clearly, there are limits to how much we can do from a balance sheet perspective and therefore we need to make sure we are choosing the most accretive opportunities that we can find. We haven't given any further guidance in terms of the volumes that we have, but you can see that the 26 volume is substantially lower than the 25 volumes in terms of number of openings that we have currently.

[Simon Clinton, CFO at Safestore Holdings]

And I think that's a reflection of the fact that we want to see some of the earnings momentum come through that we get from the short term side. Clearly, are other opportunities for other sources of cash that we could have. And we mentioned a few times in the past the fact that we could use alternative sources of capitals like through a joint venture in many ways as in the same way as we have done with our Italian investment. And there's potential for that to be a route forward as well for us.

[Aaron Guy, Real Estate Equity Analyst at Citi]

Okay. Understood. That's clear. Just in terms of the investment markets that you mentioned, can you talk a little bit about how you see the investor demand, particularly in the sort of largest chunk of the portfolio in The UK at the moment? Do you see a sort of strong demand or increasing demand for to buy assets and portfolios of assets sort of currently?

[Aaron Guy, Real Estate Equity Analyst at Citi]

And do think that's due to sort of rates coming down or rental growth strength or maybe a combination of both? Just how you see the investment market strengthening at the moment or weakening if it's weakening?

[Simon Clinton, CFO at Safestore Holdings]

Yeah. I think the investment market has remained healthy. There is very strong appetite for self storage as an asset class. It's a difficult asset class to build scale in from an investor perspective. And therefore, whenever there are opportunities to acquire assets at scale, think there's been, you know, a good level of interest.

[Simon Clinton, CFO at Safestore Holdings]

The the the market itself doesn't have the same volume of transactions as some of the other subsectors, I think, within real estate. But I think from what we're seeing is that there continues to be very strong interest and good price tension for when there are any opportunities come up.

[Aaron Guy, Real Estate Equity Analyst at Citi]

Okay. Understood. And just on the switch of the 150,000,000 from sterling to euros to benefit from that rates differential. I guess you don't want to stray too far from matching sort of income, and asset basis. But if you look at the refinancings over the next, year or two, could you potentially look to switch some of those refinancings to euros as well?

[Simon Clinton, CFO at Safestore Holdings]

Yeah. I think potentially. So we have on our balance sheet we have I think it's €1,300,000,000 worth of assets. We have about €650,000,000 worth of debt now matching that. So I think that's a good level of matching across the business.

[Simon Clinton, CFO at Safestore Holdings]

We obviously have more leverage in euros than we have in sterling, but we need to look at it on the overall corporate side. And of course the corporate the overall corporate perspective is on a 27% loan to value, which I think puts us in a sort of a healthy place within our sort of expected normal operating range. Clearly, there is a big gap between base rates at the moment. Whether that will continue remains to be seen as well. But what we'll do is we'll make sure that we are being prudent in terms of the way that we're structuring the business from a risk perspective, while still making sure that we're taking advantage of any opportunities there are if there are rate dislocations that we can match whilst using the natural hedges that we have from our asset base.

[Aaron Guy, Real Estate Equity Analyst at Citi]

Okay. Understood. Thank you.

[Operator]

Ask your question. Our next question comes from Sam Nott. Sam, please unmute and ask your question.

[Analyst]

Hi. Thanks for the presentation, guys. Two questions if I can. of all, just on the the operating environment. Obviously, the like for like growth has improved compared to maybe this time last year.

[Analyst]

When you're talking to customers and sort of reasons for move out, has that shifted? Is it more in terms of pricing or the sort of actual level of demand required?

[Frederic Vecchioli, CEO at Safestore Holdings]

No. There is no change. I mean, this is a business as usual. And in fact, through the various cycles we've gone through in the history of this business, we never really saw a change of behavior of customers once they move in. So you have changes at the moving point, basically the level of inquiries, which fluctuates.

[Frederic Vecchioli, CEO at Safestore Holdings]

We do believe that there is a fundamental secular growth, but short term there are economic cycles and that has an impact on the volume of inquiries that we get and that can have some time an impact on the moving rates. But once customer are in, I would say that I've never observed the rule change of how they behave.

[Analyst]

Thank you. And then just a point on the interest, obviously, that €3,300,000 increase in interest. If that's due to new development, why is that not being capitalized, or is there some other moving part here that I'm missing?

[Simon Clinton, CFO at Safestore Holdings]

So, yes, you're right. As as we're doing developments, we capitalize the interest, whilst the development is ongoing. But as the development opens essentially we can no longer capitalize the interest at that point. And therefore, the we have a year on year increase in interest due to the openings that we've had as well as the interest sort of the underlying business that

[Analyst]

Okay. So there's a gap between open stores and the interest that was capitalized, is it?

[Simon Clinton, CFO at Safestore Holdings]

Yeah. Yeah.

[Analyst]

Thank you.

[Operator]

Thank you very much, Sam, for your question. That was our final question. So it just leaves me to thank everybody on the call for your questions and for the presentation. We will now close the call.

Participants

Executives

• Frederic Vecchioli, CEO
• Simon Clinton, CFO

Analysts

• Samuel King, VP - Real Estate Equity Research at BNP Paribas
• Analyst
• Aaron Guy, Real Estate Equity Analyst at Citi