The United Kingdom's largest self-storage company, Safestore, has reported a full-year loss for 2009, even though the number of customers using its facilities has steadily increased. After making a pre-tax profit of £14.9 million in 2008, it recorded a pre-tax loss for 2009 of £9.4 million ($15 million). Per share earnings fell from 6.68p to a loss of 0.14p.
Occupancy of Safestore's storage units grew by 57,000 square feet in 2009, against a drop of 195,000 square feet in 2008. Rental rates also rose 4.9 percent. At year's end, Safestore was charging £25.24 per square foot of unit space. Safestore's UK and French earnings rose 1.9 percent, from £82.9 to £84.4 million.
As recently as September, Safestore remained optimistic. From the beginning of the year to July 1, occupancy had increased by 110,000 square feet. Average rents had gone up by 5.3 percent. At the time, Safestore's chief executive officer, Steve Williams, commented that the economic recession was keeping some people who needed more space from moving, and that instead of moving, those people were turning to self-storage. "We are starting to see some signs of recovery in the housing market, but there are still people who can't or won't move and require extra space," Williams said at the time. Businesses were also turning to self-storage, because the leases are more flexible and affordable than long-term leases are.
But Safestore's operational performance, as strong as it was, was not enough to prevent it from taking a loss on paper as its investment properties declined in value. The biggest drop in values occurred in the first half of 2009. In 2008, Safestore recorded a loss of £8.3 million. Before the investment losses, depreciation, taxes, and fixed rate interest hedges were applied, Safestore's earnings were listed as £45.7 million for 2009. But after the losses were applied, all in all, the group lost £41.6 million in 2009.
"Last year was one of the worst years in memory," admitted Williams. "We put in a resilient performance....Property valuations in the second half pretty much recovered, so we would be confident that you are not going to see too much difference next year."
Despite the losses, Safestore says that it will pay its investors a final dividend of 3p per share, which will bring the total dividend for the year to 4.6p.