LONDON, UK: Lok’nStore, the fast-growing self-storage company, announced the Sale and Manage-Back of four of its freehold stores for a total gross consideration of £39.0 million to Self-Storage Trading LLP. The purchaser is an existing institutional managed-store client wholly independent of Lok’nStore and its directors.
Lok’nStore will continue to manage the stores, located in Basingstoke, Cardiff, Horsham and Portsmouth, as branded Lok’nStore operations maintaining the operational footprint of the business. Lok’nStore will receive management and performance fees for managing them on behalf of their new owner.
The total consideration of £39 million receivable is subject to a £1.8 million downward adjustment in respect of certain committed works to be completed at two of the sites.
The net proceeds of the sale will be recycled quickly into new, fast growing landmark stores. As of today, Lok’nStore has three further sites with lawyers that expect to secure shortly, and a number of other opportunities are progressing as part of the Group’s continuous site evaluation program which continues to identify high-quality sites for new landmark stores.
These new target sites are over and above Lok’nStore’s current pipeline of twelve stores which will be funded from the Group’s existing £100 million revolving credit facility.
In the year to 31 July 2021 the four stores generated revenue of £2.54 million and contributed £1.54 million to Group EBITDA. In the first year following the sale, the Group expects to receive incremental management fees of c.£0.2 million in respect of the manage-back arrangement which will flow directly to Group EBITDA. The historic cost of the four stores was £13.75 million and their stated fair value as at 31 July 2021 was £31.75 million.
This Transaction does not impact the Group’s ability to grow its annual dividend in line with market expectations and which is well covered by projected EBITDA levels of the business going forward.
The Group’s adjusted pro forma Loan to Value ratio at 31 January 2022 calculated on a net debt basis falls to c. 8.0% (31 July 2021: 21.0%).
Andrew Jacobs, Executive Chairman of Lok’nStore said: “This transaction, at a 22.8% premium to the July 2021 independent valuation, demonstrates the value Lok’nStore is creating and the growing institutional demand for UK self-storage assets.
“The £37.2 million of net cash generated from this transaction will support the further expansion of our new Landmark store pipeline. Our strategy remains unchanged, to recycle capital to deliver a faster growing return, which allows us to increase the rate of dividend growth for shareholders.
“This is a busy and exciting time for Lok’nStore as we rapidly grow and improve the quality of our owned portfolio creating value for our shareholders without significantly increasing risk.”