Safestore reports 5.7% revenue growth in third quarter

Safestore Holdings plc reported a 5.7% increase in Q3 2025 group revenue to £59.6 million at constant exchange rates, driven by a 3.4% rise in like-for-like revenue, with expansion markets leading at 13.0% growth. While overall group occupancy slightly decreased to 78.3%, like-for-like occupancy improved to 81.8%, and the average storage rate grew by 1.6%. The company continued its expansion with new store openings in Brussels and Paris, secured a €77.5 million term loan, and reiterated its expectation to deliver over 700,000 square feet of new space for FY2025, maintaining its EPS guidance.

Analysis

Safestore Holdings plc demonstrated solid top-line growth in its third-quarter update, with group revenue increasing 5.7% at constant exchange rates to £59.6 million, supported by a 3.4% rise in like-for-like revenue. The company's geographic expansion strategy appears to be a primary growth driver, evidenced by a strong 13.0% like-for-like revenue increase in its newer Spanish, Dutch, and Belgian markets, which significantly outpaced the mature UK (+2.8%) and Paris (+1.7%) segments. While group closing occupancy declined by 1.1 percentage points to 78.3%, this is likely a dilutive effect from its aggressive new store opening program, including recent launches in Brussels and Paris. The more indicative metric of underlying health, like-for-like occupancy, showed a modest improvement to 81.8%. Furthermore, the company exhibited pricing power with a 1.6% increase in the average storage rate. Financially, Safestore has enhanced its stability by securing a new five-year €77.5 million term loan and hedging the interest rate, mitigating exposure to monetary policy shifts. Crucially, management reiterated its full-year EPS guidance for fiscal 2025, signaling confidence in its ability to absorb a temporary occupancy dip while executing on its plan to add over 700,000 square feet of new space.

Key Decisions for Investors

• Investors should view the decline in group occupancy in the context of the company's aggressive and successful expansion, focusing instead on the positive like-for-like occupancy trend and robust growth in new markets as key indicators of underlying health.
• The reaffirmation of full-year 2025 EPS guidance provides a significant degree of confidence, suggesting that current growth momentum and pricing power are sufficient to offset the costs and temporary dilution from the new store pipeline.
• Monitor the lease-up velocity and profitability of the new stores in the coming quarters, as the successful execution of this 700,000 square foot expansion is critical to validating the current strategy and unlocking future value.
• The successful refinancing and interest rate hedging of its new debt reduces a key financial risk, which should be considered a positive factor when modeling the company's future free cash flow and valuation.