Lok'nStore Group plc receives £39 million gross consideration

Self storage company Lok’nStore said today that it received a total gross consideration of £39 million from the sale and manage-back of four freehold stores. 

The Group sold four of its freehold stores to Self-Storage Trading LLP, an institutional managed-store client, for a total of £39 million. 

In the year to 31 July 2021 their four landmark stores generated a total revenue of £2.54 million. One year after the sale, Lok’nStore expects to receive incremental management fees of c.£0.2 million.

The freehold stores located in Basingstoke, Cardiff, Horsham and Portsmouth will remain branded as Lok'nStore operations and the company will receive management and performance fees as long as they continue to manage the stores. 

Lok’nStore says this transaction represents a 22% uplift on the valuation of stores and determines that the Group’s net asset value (fair market value) has shown increased demand for high-quality UK self-storage assets with mature, net positive cash flows. 

Executive Chairman of Lok'nStore, Andrew Jacobs, commented: "This transaction, at a 22.8% premium to the July 2021 independent valuation, demonstrates the value Lok'nStore is creating and the growing institutional demand for UK self-storage assets.

“The £37.2 million of net cash generated from this transaction will support the further expansion of our new Landmark store pipeline. Our strategy remains unchanged, to recycle capital to deliver a faster growing return, which allows us to increase the rate of dividend growth for shareholders.

"This is a busy and exciting time for Lok'nStore as we rapidly grow and improve the quality of our owned portfolio creating value for our shareholders without significantly increasing risk."

The Group added that this ‘Transaction’ will provide them with net sales proceeds of £32.7 million which will be used in the future to reinvest into new landmark stores. They have their sights set on the three replacement sites and are in talks with lawyers about securing them. 

The new target sites are said to be ‘over and above’ the company’s current pipeline of 12 stores and the whole endeavor will be funded by their revolving credit facility of £100 million. 

Lok’nStore reported that trading since the year ending in July 2021 continued well. Their 12 pipeline stores are said to be progressing, as well as their newly opened landmark store in Warrington.

The company's stock price is at 1040.00 GBX after undergoing a 4% increase; Lok'nStore will announce a pre-close trading update on 7 February 2022 for the six-month period ending 31 January 2022.