2. Contents
The UK Self-Storage Market
4
Market Analysis
5
The Store First Business Model
6
Store First Differentiators
7
The Investment Opportunity
7
Return on Investment
8
Total Return
8
Rotation of Storepods
8
Exit Routes
9
Responsibilities and Liabilities
9
Security for the Investor
9
SIPP Compliance
10
Costs or Deductions
10
Purchase Process
11
Termination and Early Exit
11
Ownership Structure
12
Investor Payments
12
Tax Considerations
12
Company Details
13
Store First Ltd 2011 | Prospectus
3
3. The UK Self-Storage Market
Market Analysis
Self-Storage was first established in the UK in 1980’s, initially
in the London area. The industry continues to grow steadily
in the UK and for the five years to 2009 has recorded growth
rates of between 8% and 15% per annum.
A review of the annual reports that the large Self-Storage
PLC’s have made available to their investors. These reports
show a fast growing industry with great confidence in the
outlook for the future.
Market Appraisal
Market Penetration
Big Yellow
When compared to more mature markets, the levels of
market penetration in the UK are low at just under 0.5
Sq/Ft per person. The US has more than 7.4 Sq/Ft per
person and Australasia has 1.1 Sq/Ft per person. Despite
such high levels of market penetration, the market in the
US continues to grow at 10-15% a year (based on net
lettable space). On this evidence it is clear that the UK
market has much further to grow.
Year to March 2011
Occupancy growth of 215,000 sq ft
Store revenue up 8% to £59.6 million
Average net rent per sq ft up 2% to £26.82
Storage rental has continued to increase in both price
and volume during this period. This has been fuelled by
the growth of multi-site operators such as Safestore,
Big Yellow, Access, Lok’n Store, Shurgard, Space Maker,
Storage King and HSIL Property, as well as smaller
businesses looking to enter the sector.
The latest UK Self-Storage Industry Association (SSIA)
annual report, prepared by Mintel in February 2010 reveals
that the UK self-storage industry has remained resilient
and continued to grow throughout the recent economic
slowdown.The report concludes that new operators are
coming into the market and that consolidation and reorganization is starting to take place within the sector - a
sure sign of business confidence in the industry. Nearly
half (49%) of operators state that they plan to open one
or more sites in the next five years and multiple site
operators such as Store First have continued to push
through above inflation to increase their rates.
In comparison, other commercial property sectors have
seen a sharp decline since 2008 due to the recession and
subsequent economic slowdown.
Demand for storage facilities has historically exceeded
all targeted projections and demand is still increasing as evidenced in the Mintel report. There are a number
of reasons why both consumers and businesses are
increasingly turning to self-storage.
For consumers the primary reasons remain social factors
such as the increase in single occupancy households,
families moving home, marriage, divorce, retirement
and downsizing. Lack of available suitable housing stock
for families and single people all result in the need for
consumers to enter into storage for both short and long
term contracts.
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Store First Ltd 2011 | Prospectus
Businesses are increasingly using self-storage solutions to
store and archive files and paperwork, to store stock and
office equipment and to meet fulfilment needs driven by
e-commerce. The flexibility of self-storage has a strong
appeal to small and medium sized businesses who do
not want to make a large capital outlay for storage space.
In addition to this,growing public awareness of the industry
and the concept of self-storage has also contributed to
its development. For these reasons, the UK’s Self-Storage
companies have seen the highest growth and highest
yielding returns within the commercial property sector
over the last decade.
Safestore
2010 Year-end report
Revenue grew by 5.7% to 89.2 million
9,941,000 sq ft of occupied space, up 6.1%
Average rent per sq ft up 1.2% to £25.55
Size of the Industry
There are now more than 350 companies operating
more than 750 self-storage facilities in the United
Kingdom. The UK now generates revenues of about
£360m, has over 235,000 customers using the service
and provides employment for 2,700 people. There are
around 750 significant facilities in the UK and around
26m rentable square feet, averaging 0.44 square foot per
head of population. This compares to 7.4 square foot in
the US and 1.1 in Australasia.
The biggest players are large, multi-centre companies
such as Safestore, Big Yellow, Access, Lok’n Store,
Shurgard, Space Maker, Storage King and HSIL Property.
Between them they operate over 250 facilities.
The largest concentration of centres remains in London
and the South East.
Lok’nStore
Interim results January 2011
Revenue grew 4.5% to £5.42 million
Occupancy up 2%
Prices up 3.5%
Regional Market Penetration
London
28%
14%
South
23%
35%
Northern England/Scotland
Midlands/Wales
Store First Ltd 2011 | Prospectus
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4. The Store First Business Model
Store First business model that guarantees we stand out from
the crowd; our values, ethics and commitment have helped
develop the business model to be the highest standard
available within the industry.
Store First Differentiators
The Investment Opportunity
There are a number of differentiators in the market
for end users that separate Store First from their
competition:
Investors purchase a long-leasehold (minimum 250 years)
on a storage unit, then enter into a 6 year agreement
to sub-let their Storepods to Store First Management
Ltd. Store First Management Limited will then sublet the
units, under license, to end users.
•
Store First offer their storage space at least 30%
cheaper than their competitors
•
All of the sites will have office facilities, breakout
areas, packaging facilities and van hire, goods pick
up service, forklift truck facility and reception areas
Store First Make a Difference
Dedicated to continue to provide the very best
infrastructure and support we are fast becoming an
exemplary business that is the envy of our competitors.
Store First has sites in the following locations:
Centurion Business Park, Blackburn
Empire Business Park, Burnley
Shuttleworth Mead Business Park, Padiham
Blackpool Airport
Liverpool Airport
And Store First has sites under construction in the
following locations:
Manchester City Centre
Millennium City Park, Preston
Kings Court, Rochdale
Store First Ltd has sites under option in Birmingham,
Leeds and three sites in Greater London. Store First
are focused on the North West, where levels of market
penetration are lower and higher levels of growth are
projected.
Each facility is purpose built and will offer the following
sizes of Storepods:
25 sq/ft
50 sq/ft
75 sq/ft
100 sq/ft
125 sq/ft
150 sq/ft
175 sq/ft
200 sq/ft
The sites are located on vibrant office and commercial
business parks, within easy access to motorway
links and within short driving distance of major
conurbations. All of the sites have maximum vision to
large traffic flow from either motorways or large main
roads. All centres are located in highly populated areas.
Tenants pay one month’s rent as a deposit and one
month’s rent upfront. Rent is then collected monthly
by direct debit or card payment. If any tenants default
on their rent, Store First is legally entitled to open the
Storepod, sell the contents and use the proceeds to
cover any outstanding rent.
•
•
Every site has 24 hour digital CCTV and a state of
the art alarm system installed. Coded electric gates,
perimeter security fencing, smoke detectors and fire
alarms are fitted as standard to protect customer’s
belongings
Tenants have the use of a PO Box Address along
with private meeting rooms, office space, free Wi-Fi,
and in and out bound mail services
•
Risk assessments are conducted in conjunction with
the fire service and local authorities
•
Store first have partnered with Sagar insurance to
provide cover for tenants’ contents
•
Summary terms of agreement:
•
Store First pay investors a fixed rental return of 8%
for the first two years
•
After two years, and every subsequent two years,
Store First offer investors a further two years at a
fixed rate
•
The new rate offered will be higher than the
previous rate
Points to note
•
Investors can accept the two year extension at the
new fixed rate, or choose to exit the lease and opt
for a variable rate of return instead
•
If investors choose to exit the lease, Store First will
continue to market & let their Storepod on rotation
with the other Storepods and service the tenants.
Investors are just opting for a variable rate of return
based on rental yield, rather than a fixed rate of
return offered by Store First.
•
Store First also has the option to break the lease
every two years.
All Storepods are VAT exempt and so do not attract
VAT on completion
This amounts to a comprehensive service at a lower
cost than their competitors which appeals to private
individuals and small business.
Price Comparisons
All of the below prices are per week prices for 25 Sq/Ft
of storage space in the North West and are correct as
of May 2011:
Armadillo
Big Yellow
Safe Store
Store First
£12.00
£14.50
£17.00
£8.17
Investment Levels
Investment levels start at £3,750 for 25 Sq/Ft. As a
commercial property investment, Store First is fully SIPP
approved and has been accepted by all the major SIPP
providers.
(Some small quantities of varying sizes are produced
within different Store First Sites but the above are the
most popular sizes).
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Store First Ltd 2011 | Prospectus
Store First Ltd 2011 | Prospectus
7
5. Return on Investment
The following examples are for illustration purposes and
are based on the minimum initial investment of £3,750. Our
typical investment amount now exceeds £60,000 per client.
Maximum investment level £1,000,000.
Exit Routes
This investment has a flexible exit achieved by sale of the
Storepod. Store First Ltd will help market your Storepod.
There are four possible markets:
Resale to another investor
•
Total Return
Income
Including the income, this gives a forecast total return of
£7,765 over 6 years, or 108%
All figures are net of costs
Resale to owner occupiers
•
Initial Investment £3,750
Store First Ltd plan to have all of their sites at 80%
occupancy within two years, giving them revenue from
three income streams:
•
Service charges
•
Management charges
•
Sales of other products such as packaging, gloves, tape
and boxes. Sales of these products can contribute as
much as 25% of the total revenue of a storage site.
This gives them a large margin of comfort to pay Storepod
owners their fixed rental payments and the fact that the
agreement between Store First Management and the
Storepod owners contains upwards only rental reviews
is an indication of their confidence in their business
model.
Rotation of Storepods
Storepods of equivalent size are rented out on rotation
to ensure that no one particular Storepod has any
advantage over another.
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Store First Ltd 2011 | Prospectus
Year 1
Year 2
Year 3
Year 4
Year 5 onwards
8%
8%
10%
10%
12%
A Storepod with a proven rental track record will be
an attractive investment for other investors looking
to purchase income .
£300
£300
£385
£385
£470
*Year 1 & 2 are fixed, years 3 onwards are forecast returns and could vary.
Resale to a large PLC
•
Capital Growth
The rent per square foot paid to investors by Store First
Management Limited is scheduled to grow from £17 per
Sq/Ft in years 1&2, to £21 per Sq/Ft in years 3&4, to £25
per Sq/Ft in years 5&6.
Many tenants who let the Storepods on long term
deals will welcome the opportunity to purchase
rather than rent their Storepod as this will reduce
their overheads, secure an appreciating asset for
their business and bring tax benefits.
Safestore and Big Yellow Storage are two examples
of large PLC self-storage companies with an appetite
for expansion who may purchase Storepods in bulk
as part of their growth strategy
If tenants use the Storepods for any illegal activity,
that is their responsibility and they will be liable for
any consequences. Store First Management Ltd is
responsible to ensure reasonable steps are taken to
prevent illegal activity.
Investors are responsible for business rates, however at
the moment the storepods rateable value is currently
well below the threshold where they become liable for
business rates. Rating revaluations are undertaken on a
five yearly basis and the last revaluation came into effect
on April 1 2010. More details can be found on: http://
www.businesslink.gov.uk/
Security for the Investor
•
The buildings and contents are covered by a fully
comprehensive insurance policy from Brit Insurance
a subsidiary of Lloyds of London.
•
The property is registered in the investor’s name on
a single title deed at the UK Land Registry
•
This is a UK investment covered by UK regulations
and UK law
•
The rental returns of 8% are guaranteed for the first
two years.
•
In a worst case scenario, if Store First or Store
First Management were to cease trading, the
investor would still be the owner of an underlying
asset - a storepod – which would still have a
commercial value.
Store First Management Ltd
•
Based on the Capital Value being 8.8 times rental yield
in years 3&4 the Storepod will be worth £4,632 and in
years 5&6 £5,514
In year 5, Investors have the option to enter the
guaranteed buy-back scheme. In this scheme, Store
First Management Ltd will guarantee to buy the
Storepod back off the investor for the original price
paid within the next 5 years.
Responsibilities and Liabilities
Store First Management Ltd is responsible for:
•
•
•
•
•
•
•
•
•
Refurbishment
Ongoing maintenance and upkeep
Steps to prevent any theft, vandalism or criminal damage
Utility bills
Insurance
Contracting with the end users
Servicing the end users
Collection of rent and collection of bad debt
Marketing the facilities
Store First Ltd 2011 | Prospectus
9
6. SIPP Compliance
As a commercial property investment it is fully SIPP compliant and
accepted by all of the major SIPP providers.
Purchase Process
Termination and Early Exit
Cash Investors
There is no fixed term for the investment – the term
of the sub-lease with Store First Management Limited
is six years with two year break clauses; however the
leasehold interest can be re-assigned at any time.
A client completing a cash investment pays a deposit of 10%
SIPP Investors
No deposit is required
Costs or Deductions
Tenanted Charges
Investors pay all of their costs out of the rental income
they receive.
When the Storepod is tenanted the owner is responsible
for an additional 15% management charge & a service
charge of £1.95 per Sq/Ft. These will be deducted from
the monthly rental payments.
Un-tenanted Charges
When the Storepod is not tenanted the owner is
responsible for a small ground rental based on the size
of the unit. This charge is only payable once the unit is
let and will be deducted from the first rental payment to
the investor.
Note that if investors find and service their own tenants
for their Storepod, the 15% management charge does
not apply.
All of the returns that have been quoted in the marketing
literature are net of these charges.
Table of Costs and Revenues
Property Type
Size Sq/Ft
Sale Price
(Store First Ltd)
(per Storepod)
(per Storepod)
Use of Funds
Investor’s funds are transferred on completion and are
used purely to purchase the asset. They are not used to
fund other activities or go to any third parties.
Legal Considerations,
Ownership and Regulations
Upon completion the investor will own the chosen
Storepod Property. The investor will have a single title
deed in their name registered at the Land Registry. Store
First’s solicitors will complete the purchase and liaise
directly with the investor or their solicitor to ensure
all legalities are completed. Multiple Storepods can be
purchased using one Land Registry title deed to save on
completion costs.
Solicitors
Rental Income Ground Rental Management Fee Service Charge Net Rental Return
(£17 per Sq/Ft)
Prospective investors will receive full details of the
purchase and reservation form prior to completion.
Upon completion, a contract pack will be sent outlining
confirmation of the purchase along with important
contact numbers for future reference. Following
completion a quarterly newsletter will be sent to all
investors keeping them informed of the centres activities
and points of interest.
The two year break clauses allow the investor to break
with Store First and rent the Storepod out themselves,
but in this scenario they would no longer benefit from
Store First’s marketing and service infrastructure.
(per annum)
(15% per annum)
(£1.95 per Sq/Ft)
(8% for Years 1&2)
Storepod 25
£3,750
£425
£12.50
£63.75
£48.75
£300.00
Storepod 50
£7,500
£850
£25.00
£127.50
£97.50
£600.00
Storepod 75
£11,250
£1,275
£37.50
£191.25
£146.25
£900.00
Storepod 100
£15,000
£1,700
£50.00
£255.00
£195.00
£1,200.00
Storepod 125
£18,750
£2,125
£62.50
£318.75
£243.75
£1,500.00
Storepod 150
£22,500
£2,550
£75.00
£382.50
£292.50
£1,800.00
Storepod 175
£26,250
£2,975
£87.50
£446.25
£341.25
£2,100.00
Storepod 200
£30,000
£3,400
£100.00
£510.00
£390.00
£2,400.00
Store First Ltd General Sizes
Sale Price
Gross Income
Cost once let
Cost once let
Cost once let
Net Income
Store First’s preferred solicitor is The Hetherington
Partnership Solicitors. They have completed many sales
of Storepods and as they are familiar with the product
they are quick and efficient. The charge is £400 per
contract (note that multiple Storepods can be purchased
on one contract, so this represents excellent value).
Margaret Hetherington
The Hetherington Partnership Solicitors
32 Market Street
Hoylake Wirral
Merseyside
CH47 2AF
Tel 0151 632 3411
Personal cash investors can use a solicitor if they wish,
but this is not compulsory. Using a solicitor is compulsory
for SIPP investors.
*(based on years 1&2, full details are in the brochure)
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Store First Ltd 2011 | Prospectus
Store First Ltd 2011 | Prospectus
11
7. Ownership Structure
Store First
Limited
Owns the Freehold to the site
Investor
Purchases the storepod on a long
leasehold (250 years) from Store
First Limited
Store First
Management
Limited
Sub-lease the Storepod from the
investor on an initial 6 year lease,
and rent it out to end users
Company Details:
Store First Limited
No.1 Empire Way
Rose Grove
Lancashire
England
BB12 6HA
Company No. 07463355
Disclaimer
Store First are not authorised to give investment/tax
advice and you should seek independent financial and
legal advice on all information included in this document
prior to making any investment decision. All forecasts
are based on historical performance and are purely
indicative.
The value of your property may rise or fall. No
guarantees as to future performance in respect of
income or capital growth are given either expressly or
by implication and nothing expressed or implied should
be taken as a forecast of future performance. This is
not an offer to participate in a collective investment
scheme as defined in the Financial Services and Markets
Act 2000 (section 235) and as such buyers have no
access to statutory or regulatory protections including
the Financial Ombudsman Service and the Financial
Services Compensation Scheme. Store First is not
regulated by the FSA and is not authorised to offer
advice to the general public concerning any regulated or
unregulated investment.
Although every care has been taken to make sure that
the information in this brochure is accurate, Store First
Ltd cannot accept any responsibility for mistakes or
omissions.You should take your own professional advice
before taking or refraining from any action based on the
contents of this brochure which are only intended as a
general outline to the matters referred to in it.
All content is under copyright and remains the property
of Store First Ltd unless otherwise agreed. Storepod is
a copyrighted product of Store First Ltd.
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Store First Ltd 2011 | Prospectus
Investor Payments
Investors will receive their rental yield payments monthly,
net of charges, paid directly into their bank account or
SIPP by direct debit, making this a truly “hands off”, low
maintenance investment.
Tax Considerations
Storepods are VAT exempt. The rental yield and capital
gains should be treated the same as any other commercial
property investment however everybody’s tax situation
is unique and it is recommended that investors seek
their own independent expert advice on taxation.
Telephone: +44 (0)1282 899 899
info@storefirst.com
http://www.storefirst.com
Store First Limited’s intention is to build the company to be one
of the top players in the UK self-storage market by using a similar
blueprint as many other large PLC self-storage companies, but
with an improved business model and aggressive profit driven
marketing strategy. Store First offer flexible and affordable
storage solutions in the North West for both domestic and
commercial clients. Example target markets include downsizing
and expanding companies that need more space and private
individuals who are moving home and need a short-term
storage package.
Store First Management Limited
No.1 Empire Way
Rose Grove
Lancashire
England
BB12 6HA
Company No. 07160642
Telephone: +44 (0)1282 463 063
info@storefirst.com
http://www.storefirst.com
Store First Management Limited is the letting agent and
site operator for Store First Limited’s Storepods. Store First
Management is responsible for the marketing and letting of the
Storepods, ensuring that they are maintained and servicing the
tenants.
Store First Ltd 2011 | Prospectus
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