LONDON, UK: Shurgard Self Storage Ltd has reached agreement on the terms of a recommended cash offer to acquire Lok’nStore Group. Under the terms of the acquisition, Lok’nStore shareholders will be entitled to receive 1,110 pence in cash for each share valuing the entire issued and to be issued share capital of Lok’nStore at approximately £378 million.

The offer represent a premium of approximately 15.9 per cent to the closing price of 958 pence per Lok’nStore share on 10 April 2024.

The total all-in cost of the acquisition is expected to be €613 million, including acquisition of the issued and to be issued share capital of Lok’nStore of £378 million, secured development pipeline costs to be spent over the next 3 years of €83 million, refurbishment capex of €13 million and transaction costs of €32 million. Initially the Acquisition will be financed 100 per cent through a bridge facility, where pro forma leverage will be 25 per cent loan to value and 6.2 times net debt to underlying EBITDA. Shurgard intends to take out the bridge with a mix of debt and equity and maintain its financial policy.

The acquisition is expected to be effected by means of a Court-sanctioned scheme of arrangement between Lok’nStore and Scheme Shareholders under Part 26 of the Companies Act 2006, although Shurgard reserves the right to effect the acquisition by way of a takeover offer.

The acquisition represents an attractive opportunity for Shurgard to accelerate its growth strategy and create value for its shareholders.

By combining Lok’nStore’s existing assets alongside its secured development pipeline, the Acquisition will allow Shurgard Self Storage to increase its footprint in the two most attractive target markets outside of London.

In the South East, Lok’nStore has 32 properties with five under development, whilst in Manchester Lok’nStore has five properties, three of which are under development.

Lok’nStore’s portfolio of high-quality assets in major cities across the UK gives Shurgard immediate access to attractive underlying market dynamics with strong demographic trends.

Entry to the market in the UK’s South East taps into a region as large as London with nine million inhabitants, boasting the second highest national income per inhabitant. Whilst in Manchester, Shurgard will have access to the second largest metropolitan area in the UK after London.

As such, the Acquisition is in line with Shurgard’s strategy to enter new markets with immediate opportunity to achieve scale by applying Shurgard’s operating model.

Commenting on the Acquisition, Marc Oursin, Chief Executive Officer of Shurgard Self Storage, said: “Following several successful acquisitions over the past year, I am excited to disclose this new acquisition in the UK, which doubles our presence in the country, and accelerates our growth and expansion strategy.

This milestone event for Shurgard adds an additional 171,000 sqm MLA, representing two full years of Shurgard’s targeted annual expansion, with new ramp-up and development opportunities to accelerate our growth in existing and new UK markets.

The acquisition brings with it a strong pipeline and development team, which can be leveraged to accelerate new opportunities in London, the South East and Manchester. We are excited about our ability to acquire, develop, and expand in the UK alongside our other European markets.”

Commenting on the acquisition, Andrew Jacobs, Chair of Lok’nStore, said: “Lok’nStore’s board believes the offer represents significant value for Lok’nStore’s shareholders, recognising the quality of Lok’nStore’s real estate portfolio and operational strength. Over the years Lok’nStore has built a unique portfolio of purpose-built self-storage assets.

We believe that integrating Lok’nStore’s assets and operations into Shurgard is highly complementary considering Lok’nStore’s asset locations and positioning in its markets. I would like to take the opportunity to highlight the contribution of Lok’nStore’s team over the years, whose commitment has enabled building the business to its high standards and unique asset quality it is recognised for today and ensuring leading positioning in the markets in which it operates.”

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