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

• Revenue grew 4% at constant currency, occupancy rose to 78.2% and RevPAR increased 2.3%, with expansion markets leading at 17% like-for-like growth.
• Underlying EBITDA fell by about 1%, driven by inflation and planned new-store investment, though cost actions are expected to save £3–4 million next year.
• Safestore partnered with Nuveen to acquire EZBOX in Italy, opened 10 new stores in H1 and has 16 more in development to support a target of CHF 35–40 million incremental EBITDA.
• The balance sheet remains robust with CHF 1 billion net debt, a 27% loan-to-value ratio, average debt cost down to 3.6% and a 1% interim dividend increase to 10.1 pence.

Presentation

[Frederic Vecchioli, CEO at Safestore]

Good morning, everyone, and thank you for joining us for Safestore's Alpha 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. The first slide is a reminder that we operate in a growing market, and Safestore is a strong and growing business. The self-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. 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]

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 detail for yourself, but it is important to flag that over the last 12 years, adjusted EPS is up nearly 300%, and we have returned GBP 500 million of dividends to shareholders. I'm immensely proud of the team for helping achieve this. We believe in our robust model, and I'm confident that we can continue this journey of growth. Now, turning to the first half of 2025, 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 U.K. and Paris were up 1.6% and 0.8% like-for-like, respectively.

[Frederic Vecchioli, CEO at Safestore]

Occupancy ticked up to 78.2%, and storage rates are improving with RevPAR up 2.3%. Our total lettable area is now over 9.1 million sq ft, 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 million-GBP 4 million compared to what they would otherwise. In December, we took another big step forward by partnering with Nuvin to acquire EasyBox in Italy, expanding our European footprint even further. Looking ahead, the pipeline is active. We've already opened 10 new stores this year, with 4 more in the second half and 16 in development for 2026 and beyond. Together, they'll play a big part in hitting our GBP 35 million-GBP 40 million EBITDA growth target.

[Frederic Vecchioli, CEO at Safestore]

Financially, we remain in good shape with GBP 1 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 GBP 0.101 per share. In the next slide, let's take a closer look at the trading dynamics in the first half. The key takeaway here is that we've seen encouraging momentum across the portfolio. In the U.K., 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 inquiries and a 6.6% like-for-like rise in occupied domestic space, which is helping to offset a decline in business-related demand.

[Frederic Vecchioli, CEO at Safestore]

New stores, or non-like-for-like stores, are playing their part too, contributing GBP 1.1 million in revenue during the first half. Q2 saw stronger performance than Q1, though some of that was driven by timing factors. March was strong, with demand pulled forward by consumers aiming to complete housing transactions before the April stamp duty rise, and Easter was much later this year. 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.

[Frederic Vecchioli, CEO at Safestore]

In the first half, we converted 93,000 sq ft, and we plan to repurpose 500,000 sq ft, about 50% of the total. The rationale for doing so is very clear. The average rate we achieve for smaller units is 73% higher than for units over 200 sq ft. This shift does not just respond to demand; it also improves 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 in occupancy. In our expansion market, that's Spain, the Netherlands, and Belgium, we continue to see strong like-for-like growth. Indeed, like-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.

[Frederic Vecchioli, CEO at Safestore]

I now hand over to Simon for an overview of the latest financials.

[Simon Clinton, CFO at Safestore]

Thank you, Frederic, 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 U.K., 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. 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 GBP 66 million was 1.5% lower than last year.

[Simon Clinton, CFO at Safestore]

To break this down, for like-for-like stores, we saw a GBP 1.1 million 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 U.K. 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 GBP 500,000 decrease in store EBITDA against last year. Lastly, administrative costs were up GBP 1.9 million year on year at constant exchange rates, and I'll come back to this shortly. The other key cost line, finance charges, saw a GBP 3.3 million increase year on year to GBP 13 million, reflecting increases in borrowings to finance our new store development program and our Italian joint venture purchase.

[Simon Clinton, CFO at Safestore]

Overall, EPRA basic earnings of GBP 40.6 million give us a diluted EPRA EPS of 19 pence per share. Let's take a closer look at the cost picture. Underlying costs of sales on a like-for-like constant exchange rate basis increased 5.2% year on year in the first half. The key elements of this increase were the inflation-driven rises in the U.K. 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 added an incremental GBP 2 million of cost year on year, reflecting the expansion of the portfolio. Underlying administrative costs increased GBP 1.9 million year on year. There are a couple of key things behind this.

[Simon Clinton, CFO at Safestore]

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. Secondly, we continue to be very disciplined in where we choose to deploy capital. In the first 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 second half and into next year.

[Simon Clinton, CFO at Safestore]

From a cash perspective, we continue to be strongly generating, with GBP 60 million of operating cash flow in line with last year. Free cash flow, which included the impact of high interest payments from additional borrowings to finance our development program, was slightly lower year on year at GBP 36 million. In the half, we invested GBP 58 million in our store development program, with an additional GBP 37 million for the investment in our new Italian joint venture. Our development activity was primarily financed through new borrowings, including the EUR 70 million USPP, which we issued in Q1. With this issuance, we have a healthy debt profile with staggered maturities out to 2033. We have no debt maturing before the end of October 2026. We maintain strong debt metrics with loan-to-value at 27% and an interest cover ratio just shy of four times.

[Simon Clinton, CFO at Safestore]

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 EUR and so benefiting from significantly lower base rates in that currency. These two elements combined have 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 costs to be GBP 5 million-GBP 6 million 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 GBP 11.17 per share.

[Simon Clinton, CFO at Safestore]

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 GBP 55 million came from the value created through our development program. Looking forward, the CapEx for our development program is expected to total an additional GBP 116 million, of which around GBP 44 million 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. I will hand back to Frederic.

[Frederic Vecchioli, CEO at Safestore]

Thank you, Simon. Let's begin the next section with an overview of what makes Safestore 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 first two elements are the significant EBITDA potential from driving revenue growth from our like-for-like and our newer like-for-like stores. The third driver comes from developing the pipeline. The final element is the potential from additional GVs 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 Safestore in particular, continues to enjoy strong momentum. That is because we are seeing consistent growth in inquiries across all our geographies. The drivers of demand are broad-based.

[Frederic Vecchioli, CEO at Safestore]

On the domestic side, there are life events such as moving houses, family changes, and lifestyle shifts like remote working and decluttering. On the business side, demand is coming from SMEs and larger corporates seeking flexible short-term storage solutions to support dynamic operations. Market penetration remains low, especially domestic usage, meaning there is considerable headroom for growth. While economic cycles may cause short-term fluctuations, the long-term trajectory is one of steady adoption of safe 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 safe storage. Importantly, Safestore is well positioned to capture this demand through our technology platform and digital marketing capabilities. This allows us to generate and convert inquiries more effectively than most peers.

[Frederic Vecchioli, CEO at Safestore]

I will speak to this in more detail later on. This slide looks at the supply side of the equation. Again, the story is highly supportive of our long-term growth outlook. These graphs clearly illustrate that self-storage remains undersupplied across Europe compared to the U.S. While we do not expect Europe to reach U.S. level, the direction of travel is clear. Awareness is rising, driven by increased supply. While new supply is entering the market, it is 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 the U.K., but also across Europe, and especially in the major metropolitan areas where Safestore has a strong presence.

[Frederic Vecchioli, CEO at Safestore]

These areas benefit from natural barriers to entry that support occupancy, pricing, and reduce the risk of overcapacity. 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 Safestore, who already have operational scale and market recognition in place. 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. Safestore is now present in seven European countries, and more than 95% of our sites are located in key metropolitan areas. That's intentional.

[Frederic Vecchioli, CEO at Safestore]

As I've just mentioned, urban centers offer the highest and most resilient demand, along with the strongest pricing power and the greatest barrier to entry. In the U.K. 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 have first-mover advantage. 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.

[Frederic Vecchioli, CEO at Safestore]

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. In short, our pan-European footprint gives us 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 multi-channel platform that drives leads, captures inquiries, and converts customers efficiently. Our website is SEO-optimized and integrated with backend support, lead tracking, and conversion. We manage customers online, in-store, and via national accounts, giving us multiple paths to revenue and higher conversion rates. Our use of data also sets us apart.

[Frederic Vecchioli, CEO at Safestore]

We have a rich data set of over 2 million 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. Technology alone is not enough. What really makes a difference is how it is paired with outstanding in-store teams. 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 revenue through new leads, rate management, and ancillary services. This human element adds depth and responsiveness that no digital system can replicate on its own. We are also seeing strategic benefits from the growth of our domestic customer base.

[Frederic Vecchioli, CEO at Safestore]

These customers typically prefer smaller units, which, as I discussed in my introduction, command higher rates per sq ft. As this segment grows, it supports average rate growth and contributes positively to RevPAR. In a sense, our operating model is about more than just filling space. It is about doing so intelligently, profitably, and sustainably. It is this combination of technology and talent that allows us to do it better than anyone else in the market. The next slide brings us to one of the most critical levers of our financial model: RevPAR, or revenue per available sq ft. This is a core metric that encapsulates how effectively we are monetizing our existing storage footprint.

[Frederic Vecchioli, CEO at Safestore]

Rather than looking at occupancy or rate in isolation, RevPAR captures the 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 RevPAR 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. That is supported by our data infrastructure, allowing us to respond quickly to shifts in market behavior. In summary, RevPAR 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. Now let's turn to growth, specifically our development pipeline.

[Frederic Vecchioli, CEO at Safestore]

This is where we are building the next phase of Safestore's earnings and value creation. We currently have a development program that represents a 13% uplift in our MLA, or maximum livable area, that equates to around 1.1 million sq ft 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. 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 safe storage is growing and where we've already established a strong foothold. All of this is backed by a disciplined capital allocation framework. Every new store is under return with a clear view on returns.

[Frederic Vecchioli, CEO at Safestore]

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. They are tightly aligned with our proven approach to site selection, fit-out, and marketing. They are rolled out with marginal increase in overhead. This keeps our cost-to-launch low and our speed-to-market high. 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. This slide is about the economics of maturity, our cash-on-cash returns, and how our investment in new stores converts into meaningful returns over time. We track each new development against a cash-on-cash return profile.

[Frederic Vecchioli, CEO at Safestore]

You can see this cumulatively on the graph on the left. In year one, stores tend to begin modestly, EBITDA negative or barely break even, 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. 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 GBP 35 million-GBP 40 million of EBITDA once stabilized. In the first year, new store openings are a drive to profit simply because costs come in before revenues build. This is temporary. Once occupancy scales and the stores move into operational efficiency, it becomes highly accretive.

[Frederic Vecchioli, CEO at Safestore]

Based on our current GBP 150 million capex program, we are confident this new asset will generate return well in excess of our cost of capital. 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 a sense, these slides illustrate the power of disciplined growth. We are not just adding stores; we 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 Safestore 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. Mature stores continue to deliver steady like-for-like revenue growth, supported by stable occupancy and optimized pricing.

[Frederic Vecchioli, CEO at Safestore]

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 3-4% sales growth drives a significantly higher EBITDA contribution thanks to the high operating leverage in our model. 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.

[Frederic Vecchioli, CEO at Safestore]

We also have our pipeline of targeted investment to feed into our growth profile over the coming 24-36 months, and which we can bring online without putting 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 the customer base that is shifting towards smaller, higher-yielding domestic units. We believe all these elements support growth in RevPAR, EBITDA, and ultimately shareholder value. When we talk about the Safestore opportunity, we are talking about a business with proven fundamentals, a scalable model, and a very clear roadmap for continued value creation. It is not a story based on one-off wins or cyclical tailwinds. It is built on consistent execution and strategic clarity.

[Frederic Vecchioli, CEO at Safestore]

In short, these slides tell a story of a highly scalable, capital-efficient growth model that is already delivering results and has plenty more room to run. To close, let's bring everything together. 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 U.K., 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 the U.K. maintaining a positive like-for-like sequential momentum. Financially, we remain disciplined. With our strong balance sheets, we are funding and delivering our pipeline to plan. We believe this will deliver GBP 35 million-GBP 40 million EBITDA, continuing a story of double-digit on cash-on-cash returns.

[Frederic Vecchioli, CEO at Safestore]

The valuation of our business has a strong underpin, with an EPRA NTA of GBP 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 GBP 130 million of equity 11 years ago, but we've grown since our NAV from GBP 300 million to GBP 2.3 billion, and we've returned GBP 500 million to shareholders in dividends. Financial year 2025 guidance remained unchanged, and we're confident in our ability to deliver another year of performance. Thank you for your attention. Simon and I will now be happy to answer any questions you may have.

[Operator]

If you would like to ask a question, please use the raised hand function on Zoom, and we will invite you to unmute and ask your question.

[Operator]

If you are dialing in by phone, use star nine to raise your hand and star six to unmute. Our first question comes from Samuel King. Samuel, please unmute and ask your question.

[Operator]

Hi, good morning, guys. I've got three questions, please. I'll ask them one by one. The first is on admin expenses. And of the 25% increase, just interested what the split from variable pay and development write-offs was. Just trying to understand what the run rate looks like moving forwards, as 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]

Hi, Sam. Yeah, that's right. So the largest proportion of the increase year on year came from the normalization of variable pay for head office staff.

[Simon Clinton, CFO at Safestore]

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. Yeah, that would be a half one and a half two element. The write-off of the preliminary cost 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 a magnitude of a few hundred thousand GBP. Yeah, I think we would expect the 25% to be substantially lower for the full-year basis.

[Simon Clinton, CFO at Safestore]

Okay, thanks. That's helpful. A second one on margin improvement. Can you give an indication of what the potential level of improvement is once all of the 500,000 sq ft of conversions are completed?

[Simon Clinton, CFO at Safestore]

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]

I guess the conversions are a form of the developments that we have. I think 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%. We have a few percentage points of improvement from an overall portfolio perspective to come through as the stores fill up, which are not like-for-like.

[Simon Clinton, CFO at Safestore]

Okay, thank you. It is the last one on the development pipeline. I notice you have taken the numbers off the usual graph from slide 23 that looks at the timing of earnings accretion from projects as they complete.

[Simon Clinton, CFO at Safestore]

It looks like, just from eyeballing the chart, that the near-term dilution has increased slightly again. Just any comments around that would be helpful, please.

[Simon Clinton, CFO at Safestore]

Yeah, the key movement there is due to the change in the like-for-like classification. The chart that we showed at year-end used the 2024 definition of like-for-like. The chart we're now showing needs to show the 2025 definition of like-for-like. The 13 stores which we had included in non-like-for-like at the end of last year because they were open in FY2023 have now been classified as like-for-like. The benefits of the growth in earnings 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. That's the key difference for the early years.

[Simon Clinton, CFO at Safestore]

We're expecting the overall picture to be broadly in line with the numbers that we've been showing previously, though.

[Simon Clinton, CFO at Safestore]

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.

[Operator]

Okay, yes, thank you. I've just unmuted. I had two questions, if I may. 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 first question is that the narrative is about expanding the portfolio in an inflationary economic environment.

[Operator]

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 profitable cluster, or any other operational problems, so that that capital can be redeployed elsewhere?

[Simon Clinton, CFO at Safestore]

Hey, Chris. Good morning. 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 stores are all trading really well, and we're happy with the very strong cash contribution they all give to the group.

[Simon Clinton, CFO at Safestore]

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

[Simon Clinton, CFO at Safestore]

Okay, 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 problems we've seen with Marks and Spencer and The Co-op recently, to ensure that we're not going to get any surprises on the cybersecurity front? Related to that, would it be possible to make a slightly bigger disclosure on that in the next annual report? Maybe if you could, the first part of that question is, are you doing anything differently in cybersecurity?

[Simon Clinton, CFO at Safestore]

Yeah, Chris, that's a really interesting one. Obviously, cyber is the front of everybody's minds in all industries across, well, across the U.K., but across the world, really. It is very central to our understanding of risk as a business.

[Simon Clinton, CFO at Safestore]

We are doubling down on our efforts in the normal way, as everyone else is doing. 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.

[Operator]

Yeah, morning, chaps. Thanks for taking my questions. I've got three. I'll ask them individually if that's easier. Just in terms of the development pipeline, how are you thinking about the size of the development pipeline in sort of years, say, three to five, given that it takes some time to sort of secure sites and prepare?

[Operator]

Are we at sort of peak development now as 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 think about where the development pipeline goes beyond the existing pipeline.

[Simon Clinton, CFO at Safestore]

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 has happened at half year, which has been driven by the successful completion of developments. 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.

[Simon Clinton, CFO at Safestore]

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 2026 volume is substantially lower than the 2025 volumes in terms of the number of openings that we have currently. 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, there are other opportunities for other sources of cash that we could have.

[Simon Clinton, CFO at Safestore]

We mentioned a few times in the past the fact that we could use alternative sources of capital, like through a joint venture, in many ways, in the same way as we have done with our Italian investment. There is potential for that to be a route forward as well for us.

[Simon Clinton, CFO at Safestore]

Okay, understood. That is 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 U.K. at the moment? Do you think there is a strong sort of demand or increasing demand to buy assets and portfolios of assets currently? Do you think that is due to rates coming down or rental growth strength or maybe a combination of both?

[Simon Clinton, CFO at Safestore]

Just how you see the investment market strengthening at the moment or weakening if it's weakening?

[Simon Clinton, CFO at Safestore]

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. Therefore, whenever there are opportunities to acquire assets at scale, I think there's been a good level of interest. The market itself doesn't have the same volume of transactions as some of the other subsectors, I think, within real estate. I think from what we're seeing is that there continues to be very strong interest and good price tension for whenever any opportunities come up.

[Simon Clinton, CFO at Safestore]

Okay, understood.

[Simon Clinton, CFO at Safestore]

Just on the switch of the GBP 150 million from sterling to euros to benefit from that rate differential, I guess you do not want to stray too far from matching the sort of income and asset basis. 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]

I think potentially. We have on our balance sheet, I think it is EUR 1.3 billion worth of assets. We have about EUR 650 million worth of debt now, sort of matching that. I think that is a good level of matching across the business. We obviously have more leverage in euros than we have in sterling, but we need to look at it on the overall corporate side.

[Simon Clinton, CFO at Safestore]

Of course, the overall corporate perspective is on a 27% loan-to-value, which I think puts us in a sort of 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. What we will do is make sure that we are being prudent in terms of the way that we are structuring the business from a risk perspective while still making sure that we are 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.

[Simon Clinton, CFO at Safestore]

Okay, understood. Thank you.

[Operator]

Thank you very much, Aaron, for your question.

[Operator]

A quick reminder, if you would like to ask a question, please use the raised hand function on Zoom, and we will come to you to unmute and ask your question. Our next question comes from Sam Knott. Sam, please unmute and ask your question.

[Operator]

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

No, there is no change. I mean, this is a business as usual. 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.

[Frederic Vecchioli, CEO at Safestore]

You have changes at the moving point, basically the level of inquiries, which fluctuates. 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 sometimes an impact on the moving rates. Once customers are in, I would say that I've never observed a real change of how they behave.

[Frederic Vecchioli, CEO at Safestore]

Thank you. Then just a point on the interest, obviously, there's that GBP 3.3 million 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]

Yes, you're right. As we're doing developments, we capitalize the interest whilst the development is ongoing. As the development opens, essentially, we can no longer capitalize the interest at that point.

[Simon Clinton, CFO at Safestore]

Therefore, 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.

[Simon Clinton, CFO at Safestore]

Okay, so there's a gap between open stores and the interest that was capitalized.

[Simon Clinton, CFO at Safestore]

Yeah,

[Simon Clinton, CFO at Safestore]

got it. Thank you.

[Operator]

Thank you very much, Sam, for your question. That was our final question. 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

• Analyst 1
• Analyst 4
• Analyst 3
• Analyst 2