Self-storage firm Lok’nStore Group (LOK:AIM) posted a sharp rise in revenues and earnings for the first half as it continues to roll out sites in a desperately under-served market.
The company also released significant value through the sale-and-manage-back of four mature stores, allowing it to reduce debt and increase its dividend.
Growth Machine:
- Lok’nStore has a strong record of growing both earnings and net asset value, a trend that continued in the six months to January.
- Group revenues rose 31.1% to £13.4 million driven by an increase in sites and an impressive 18.5% rise in price per square foot of occupied space.
- NAV or net asset value per share jumped 48.4% to 843p thanks to the increase in revenues and rental space.
- The firm currently has 37 sites but it plans to add 12 more sites over the coming years to add more than a third in new space thanks to its fully-funded store pipeline.
Actively Managed:
- When a new site is opened and space is rented, rental income starts to climb as does the net asset value of the store.
- Once a store reaches maturity, both income and net asset value increase at a slower rate.
- Therefore, the firm takes an active approach to managing its estate, selling some of its more mature sites, and taking a management fee to operate the store while using the capital raised to invest in new opportunities.
- In the six months to January, the company completed the sale-and-manage-back of four mature stores, raising £37.2 million which represented a 23% premium to their valuation in July last year.
- Given the under-penetration of self-storage in the UK compared with markets such as the US, Lok’nStore management is confident there is a long runway of growth still ahead of them.
- Despite its growth plans, the firm is conservatively managed with a low level of net debt and has increased its dividend for the eleventh year running.
