Lok'nStore Votes In Favor of Shurgard Acquisition

On April 11, 2024, Shurgard, the largest developer, owner, and operator of self-storage facilities in Europe, announced a cash offer to acquire the entire issued share capital of Lok’nStore.  The UK scheme of arrangement to implement the Acquisition was subject to Lok’nStore shareholder approval, which Shurgard is pleased to announce was received today, with 76.92% of those voting at the Court Meeting and 76.94% of those voting at the General Meeting, voting in favor.

Shurgard and Lokn’Store have now begun integration planning to ensure that both parties are prepared for successful completion, which is expected to occur on August 1, 2024. Shurgard will consolidate Lok’nStore financial as of this date.

Commenting on the Acquisition, Marc Oursin, Chief Executive Officer of Shurgard, said:

“Following the successful shareholder vote, I am looking forward to bringing this high-quality business and team into Shurgard. The acquisition of Lok’nStore will double our presence in the UK, a key target market, and will accelerate our growth strategy. It has a highly attractive, recently repositioned, modern, purpose-built portfolio, on top of which it brings a strong pipeline. Furthermore, its strong development team will accelerate new opportunities in London, the South-East and Manchester. We expect the NOI yield at maturity to be in line with our guidance at c. 8%. We are excited about our ability to acquire, develop, and expand in the UK alongside our other European markets.”  

Acquisition highlights

• In line with our strategy to increase footprint in key target markets, Lok’nStore represents a unique opportunity to double Shurgard’s UK footprint from 47 to 99 stores in key locations with attractive supply/ demand dynamics. The Acquisition adds depth and visibility to our UK pipeline with an additional 171,000 sqm MLA owned stores, representing a full two years of total Shurgard growth
• Substantially refreshed, modern and purpose-built owned stores portfolio with:  
  • 43% built since 2022 versus 13% for Shurgard in the UK, a portfolio with significant growth potential though ramp up
  • Efficient portfolio with 76% purpose-built (including secured development pipeline) versus 63% for Shurgard leading to low maintenance cost and attractive real estate
  • Majority of freehold ownership (79% versus 93%) in line with our strategy and opportunities for leasehold acquisitions
  • A slightly higher average unit size of 6.9 sqm versus 5.9 sqm for Shurgard leading to potential optimization of the unit mix
  • An average MLA of 5,000 sqm per store versus 5,100 sqm per store for Shurgard, stores with optimal size from an operational efficiency point of view.
• 89% owned stores located in London, South-East and Greater Manchester regions with the highest income per inhabitant in UK, representing a highly concentrated and efficient portfolio in affluent regions. The competition intensity being similar than in London, with 45 inhabitants per units versus 43 for Shurgard
• 18 stores under management contract generating £1.7m management fee p.a., 1/3 located outside the main areas of London, South East and Greater Manchester
• The transaction will generate a NOI yield of c.8% at maturity (5-6 years), calculated on total all in cost (€613 million inclusive of the secured development pipeline)
  • Shurgard has a proven track-record of successfully integrating and driving synergies and growth from acquisitions
  • Significant opportunity to further accelerate growth by driving Lok’nStore’s occupancy to 90% (from 67%) over next two years by utilizing our proprietary dynamic pricing model and online marketing proven track record. Pipeline stores are also expected to reach 90% within two years of opening in line with Shurgard group average
  • Digitalization supporting dynamic pricing model, a key driver of rental growth with a rate CAGR of 2% to stabilization
  • Expect at least €4-5 million of costs & tax synergies in first full year and further opportunities for efficiencies as Lok’nStore benefits from Shurgard’s scale, e-rental solution and market-leading operational platform with a site-by-site optimization plan
• Accretion on Shurgard adjusted EPRA earnings per share: mid-single digit dilutive in 2024, neutral in 2025 and accretive from 2026 onwards
• We maintain a financial policy with a target to keep LTV at c. 25% and 4.0x to 5.0 Net debt/Underlying EBITDA, with a short-to-medium-term maximum of 35% LTV or above 5.0x Net debt/Underlying EBITDA. We aim to finance Lok’nStore and Shurgard’s future development pipeline with a mix of debt and equity. We remain committed to a robust balance sheet and being within our financial policy in the medium-term.

The Acquisition remains subject to the sanction of the Scheme by the UK Court and the satisfaction (or, where applicable, the waiver) of the other conditions set out in the Scheme Document published by Lok'nStore on 17 May 2024.

A presentation of Shurgard’s Lok’nStore Acquisition is available here: https://www.shurgard.com/corporate/investors/acquisitions/loknstore  

About Shurgard

Shurgard is the largest provider of self storage in Europe. The company owns and/or operates 282 self-storage facilities and approximately 1.4 million net rentable square meters in seven countries: France, the Netherlands, the United Kingdom, Sweden, Germany, Belgium and Denmark.

Shurgard is a GRESB 5-star and Sector Leader, has an ‘AA’ ESG rating from MSCI, is rated Low risk by  Sustainalytics and has a EPRA sBPR Gold medal. Shurgard is part of the BEL ESG index.  

Shurgard’s European network currently serves c. 190,000 customers and employs approximately 750  people. Shurgard is listed on Euronext Brussels under the symbol “SHUR”.

For additional information: www.shurgard.com/corporate For high resolution images: https://shurgard.prezly.com/media