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 reduce debt and increase its dividend.
GROWTH MACHINE
Lok’nStore has a strong record of growing both earnings and net asset value, a trend which 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 are 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.
