Self-storage company Safestore has acquired Self Storage Holdings, which trades as Alligator Self Storage, for £56m – a 7.7% yield.
The deal represents the latest in a string of M&A activity in the sector as landlords look to amass scale.
The deal is expected to complete on 1 November, and includes Alligator Self Storage’s 12 UK stores, which have a total lettable area of 563,000 sq ft.
Its assets are mostly in London and the South East. It has assets in Camden, N1, and in Fareham, Farnham, Luton, Southampton and Winchester.
Alligator Self Storage also has properties in Birmingham, Bolton, Bristol and Nottingham. Ten of its 12 assets are freehold or long leasehold and two are leasehold stores with an average remaining lease length of 15.4 years.
The acquisition will reinforce Safestore’s position as the UK’s largest self-storage group by number of sites with a combined total of 120 stores, 67 of which will be in London and the South East. The Alligator Self Storage portfolio is operating at 68% occupancy and produces an annual rental income of £4.3m pa on turnover of £7.5m.
The Self Storage Holdings business, which had pro forma gross assets of £56.4m on 30 September 2016, will be acquired on a debt- and cash-free basis.
The acquisition will be funded from the group’s existing debt facilities, with the group’s £60m accordion facility converted into a committed revolving credit facility.
On a pro forma basis, the group’s loan-to-value ratio post completion of the acquisition would be 35% compared with 32% at 30 April 2017.
Safestore chief executive Frederic Vecchioli said: “Over the past 15 months, Safestore has cemented its market-leading position in the UK, investing £100m in two earnings accretive acquisitions, and opening four sites with a further two stores in the pipeline. These transactions have supplemented the organic growth being delivered by the existing business.
“With the acquisition of Alligator Self Storage we have acquired a complementary portfolio of largely freehold stores across the UK.
“Following this acquisition, Safestore will have a total of 146 stores, of which 120 are in the UK and 26 in Paris. When combined with our acquisition and development activity in Paris, we are continuing the consolidation of our leading positions in both markets.”
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