Safestore H2 Earnings Call Highlights

16 Jan 2026, 05:36 by Scott Moore · The Cerbat Gem

Safestore (LON:SAFE) management used its latest results call to frame fiscal 2025 as a year of “steady operational delivery” while the company continued investing to expand its pan-European platform, accepting near-term earnings dilution in exchange for what it expects will be stronger earnings and cash generation as newer stores mature.

Chief Executive Frederic said the business has now moved past peak openings, with “the majority of the assets that will drive future earnings” already built, open, and filling. As a result, he said the drag from immature stores and land is “mechanically reducing,” and future earnings growth will be driven mainly by utilization, store maturity, and operational execution, with a transition toward greater cash generation and investment continuing at a reduced scale.

FY25 results: revenue growth and stable margins, with EPS pressured by expansion

Safestore reported group revenue of £234.3 million, up 4.9% year-on-year, with growth across all markets. On a constant-currency basis, total revenue grew 5%, while like-for-like revenue increased 3.1%, which management said marked six consecutive quarters of growth.

Underlying EBITDA before leasehold costs was £137 million, up around 1.2%–1.3% year-on-year. Management attributed the year’s performance to like-for-like trading growth and cost control, offset by higher administrative expenses. Adjusted diluted EPS was 40.3 pence per share, described as in line with consensus, while EPS declined slightly year-on-year due to the impact of funding the expansion program and higher interest costs following additional borrowings.

On the dividend, the company recommended a 1% increase in the final dividend to 20.6 pence per share, taking the full-year dividend to 30.7 pence per share, also up 1%, in line with its progressive dividend policy.

Operational metrics: occupancy gains and RevPAF growth

Management highlighted improving utilization and revenue quality across the existing estate. Like-for-like closing occupancy increased to 81.2% for the group, and revenue per available square foot (RevPAF) rose 2.9%.

Store margin remained stable at about 68%, supported by what the company described as better-than-expected cost containment. Like-for-like store cost growth was 4.4%, below previous guidance of 7%–8%, as savings initiatives landed earlier than anticipated.

Finance Director Simon said the savings measures included:

Dynamic staff management in Paris, including lower variable pay
Integration of UK call-center teams with stores
Improved risk/benefit sharing with insurance companies
Challenging business rates assessments across the group

Administrative costs increased 19.6% year-on-year, driven predominantly by the reintroduction of variable pay for head office colleagues after prior years with limited bonus outcomes, along with investment in group capabilities such as technology and AI.

Capital deployment and balance sheet: peak openings in FY25, debt increases to fund growth

Safestore said its development program continued to add space, with FY25 representing peak openings. Over the last three years, the company opened 30 stores adding 1.4 million square feet of maximum lettable area (MLA), with investment of £225 million. In FY25 alone, 13 stores added about 0.7 million square feet, taking the portfolio to 9.28 million square feet of MLA.

The current pipeline totals 1.1 million square feet of MLA to be delivered from FY26 onward, with an estimated cost of £212 million, of which £96 million has already been spent. Management said the pipeline is expected to be delivered at a steadier rate, supporting “incremental earnings progression,” and noted that around 60% of the pipeline sits in London and Paris. Frederic added that the company “very rarely” takes planning risk and typically deploys capital only when construction is imminent.

Cash flow before investing activities was £89 million, up 4% year-on-year. The group invested £103 million net in developments and the existing estate (including partitioning projects and refurbishments), and invested £38.9 million into its joint venture in Italy, including development of new stores. Dividends paid totaled £66.6 million.

To fund investment, the company added £105 million of new borrowings. Net debt, including lease liabilities, rose by £159 million to £1.1 billion at year-end. New financing included a €77.5 million term loan (interest swapped to a fixed 3.4%) and an eight-year €70 million USPP with a 4.03% rate. Management said its approach remains to stagger maturities, with the next USPP maturities (just under £100 million) due in FY26 at the end of October.

The company also cited benefits from falling rates on the 36% of debt that is floating, as well as the impact of swapping €150 million of facilities from sterling into euros, contributing to a 50 basis point reduction in average borrowing costs at year-end.

Market and portfolio: UK partitioning, Paris expansion, and strong growth in expansion markets

Frederic reiterated Safestore’s long-standing strategy of building dense urban portfolios in supply-constrained cities and expanding methodically. He said the group operates 211 owned stores and about 9.3 million square feet of MLA (10.4 million including RGVs), with a future footprint of 11.5 million square feet when the pipeline is delivered.

In the UK, which represents 64% of group MLA, revenue rose 3.3%. Management described demand as mixed, with domestic customers “particularly strong.” Safestore accelerated a program to convert large legacy units into smaller units better suited to domestic use, converting 190,000 square feet in 2025 out of a 500,000 square foot two-year target. Frederic said smaller units generate around 60% higher rent per square foot. While year-on-year inquiry growth was muted, new lets increased by close to 7%, with the average size per new let declining around 6.5% due to the reconfiguration. He said the mix shift, AI-driven pricing, and improved conversion supported 2.5% like-for-like rate growth, stable occupancy, and RevPAF expansion.

In Paris, management said domestic demand remained strong while business inquiries were weaker. Like-for-like occupancy increased 2.1 percentage points to 84.8%. The company expanded regional MLA by 17% during FY25 and said one store opened after year-end, with another three expected over the next 12 months, taking the Paris platform to 38 stores. Frederic cautioned that recently opened stores could create short-term RevPAF dilution through overlap and lower initial pricing, but characterized it as a deliberate trade-off given supply constraints.

Expansion markets (Spain and Benelux) delivered revenue growth of 27% in 2025, with like-for-like growth of 13.5%. Spain posted nearly 23% like-for-like growth. Like-for-like occupancy was 81% in Spain, 86% in the Netherlands, and close to 87% in Belgium. Management said these markets are shifting “from investment to contribution,” aided by centralized pricing, marketing, and AI tools that allow scaling with limited local overhead.

In Italy, a 50/50 joint venture with Nuveen comprises 12 stores across several cities, with Safestore’s investment limited to £39 million. Management said the portfolio is expected to deliver yield on cost of around 10%, consistent with group targets, and reported occupancy of 76.8%. In Germany, its associate investment had seven stores open with closing occupancy of 88%, and management noted additional pipeline across multiple cities including Munich post year-end.

Outlook: cost inflation moderating, EPS headwinds easing as developments mature

For FY26, management said early trading was “solid,” with like-for-like revenue for November and December continuing the same trend. It expects cost inflation pressures to persist but at lower levels than recent years, citing UK National Living Wage and National Insurance increases as key drivers. Like-for-like underlying costs of sales are expected to rise 3%–6% year-on-year, with further efficiencies planned, including procurement improvements for energy and insurance.

Interest costs are expected to rise as additional debt supports development activity, but management said this should be partially offset by reductions in floating rates, with an estimated net increase in interest costs of £1–£2 million year-on-year, depending on rate movements. Development capex for FY26 is projected at £86 million.

Management also reiterated its view that the development program is accretive over time, projecting that existing non-like-for-like stores and the pipeline could add £35 million to £40 million of EBITDA on stabilization. Frederic emphasized that the company’s minimum development hurdle rate remains 10% and “has not changed.”

In Q&A, management reiterated its focus on optimizing RevPAF rather than prioritizing either occupancy or rates alone, and said the group sees opportunities in both as mature like-for-like stores progress. It also said the published valuation is “in line with the market,” describing a positive investment market with the like-for-like portfolio stable year-on-year and value added through development and stabilization of new stores.

On capital allocation, management said it periodically considers buybacks when the shares trade at a discount to NAV, but it has no current plans and is weighing returns versus development opportunities and leverage considerations.

About Safestore (LON:SAFE)

Safestore 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.