Release Date: February 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Shurgard Self Storage Ltd (SSSAF, Financial) achieved a significant total revenue growth of 13% for the full year 2024, surpassing guidance.
- The company maintained high occupancy levels, reaching almost 90% over the year, with a consistent positive growth of around 5% for six consecutive quarters.
- Net operating income (NOI) grew by 12.2% year-over-year, reflecting the scalability of Shurgard's platform and the impact of digitalization.
- Shurgard's acquisition of Lok'nStore in the UK and other portfolios in Germany contributed to strong revenue growth, with UK and Germany revenues increasing by 47.3% and 43.7%, respectively.
- The company successfully issued its first bond of EUR500 million with a fixed coupon of 3.625% for 10 years, securing long-term financing and maintaining a strong balance sheet with an investment-grade BBB+ rating from S&P.
Negative Points
- Interest expenses increased significantly to EUR30 million due to additional debt for major acquisitions, impacting financial costs.
- Adjusted EPRA earnings per share decreased by 3% compared to 2023, partly due to the dilution impact from equity raises and scrip dividends.
- The effective tax rate is expected to increase to approximately 18.5% in 2025, up from the 2024 rate of circa 17%.
- Despite strong revenue growth, the net debt to EBITDA ratio remains relatively high at 6.2 times, indicating a need for continued financial discipline.
- Interest expenses are projected to rise further to around EUR50 million in 2025, reflecting the long-term financing of investments, which could pressure profitability.
Q & A Highlights
Q: Can you elaborate on the revenue growth drivers for 2024?
A: Marc Oursin, CEO, explained that the revenue growth of 13% for 2024 was driven by high performance from same stores across all markets and strategic acquisitions in the UK and Germany. The same store revenue growth of 4.8% was primarily due to a 5.2% increase in in-place rent and maintaining high occupancy levels at nearly 90%.
Q: How did the recent acquisitions impact financial performance?
A: Thomas Oversberg, CFO, noted that the acquisitions, particularly Lok'nStore in the UK, significantly contributed to revenue growth, with the UK and Germany seeing revenue increases of 47.3% and 43.7%, respectively. The integration of Lok'nStore was smooth, with occupancy increasing from 67% to 72% by December 2024, and the acquisition is expected to be earnings accretive from 2025.
Q: What are the expectations for 2025 in terms of growth and investments?
A: Thomas Oversberg, CFO, stated that Shurgard anticipates an 11% growth in revenue and NOI across all stores in 2025, supported by network expansion and capital investments of around EUR200 million. The company plans to add 90,000 square meters of storage capacity and expects interest expenses to rise to EUR50 million.
Q: How is Shurgard managing its financial structure to support growth?
A: Marc Oursin, CEO, highlighted that Shurgard's financial structure is robust, with an investment-grade BBB+ rating from S&P. The company issued a EUR500 million bond with a 3.625% fixed coupon for 10 years, maintaining a leverage ratio of 23.3% LTV and net debt to EBITDA of 6.2 times, ensuring long-term financial security.
Q: What are the medium-term growth expectations beyond 2025?
A: Thomas Oversberg, CFO, mentioned that Shurgard expects medium-term revenue and NOI growth of around 8% annually, with a focus on portfolio expansion. The company plans to add 125,000 square meters of new storage capacity in 2026, with an estimated investment of EUR320 million, and aims to maintain a stable dividend policy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
