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What Shurgard’s €2.4bn IPO means for UK self-storage plays
Europe’s largest self-storage player Shurgard Self Storage is to float on the Euronext Brussels stock market and raise €575m, with trading in the shares expected to commence on 15 October. This is relevant to UK investors for several reasons.
Some of the funds raised by Shurgard, an affiliate of US-based real estate investment trust Public Storage, will be used for the planned acquisition of a store in Kensington – thus increasing its position in the UK – as well as paying down borrowings and using cash for future growth.
The numbers from the IPO (initial public offering) provide an interesting read-across on valuation for the London-listed storage plays Big Yellow (BYG), Safestore (SAFE) and our top pick in the space Lok’n Store (LOK:AIM).
Self-storage for households and businesses has been a growth area in recent years driven by smaller homes, a more mobile population, hoarding and the growth of smaller internet-based businesses. Encouragingly for Shurgard this market is less developed in continental Europe.
Based on the top valuation implied by its IPO pricing range of €2.4bn and last reported earnings before interest, tax, depreciation and amortisation (EBITDA) of €135m, Shurgard trades on 17.8 times earnings. That is cheaper than several UK-quoted rivals.
For example, Lok’n Store trades on 18.6 times EBITDA, a premium justified in our view given our faith in its ambitious expansion plans; Big Yellow trades on 19.5-times and Safestore which trades on a multiple of 15.2 using the same metrics. (TS)