The UK PIN Fund (our fictional Fund consisting of property-related companies that are listed on the stock exchange) had another bad quarter in Q2, falling in value by 10.5%, despite six of the 10 companies paying dividends.
The Fund, which originally consisted of five companies when formed in 2014, before expanding to 10 companies in 2015, has had a terrible 2022, falling in value by 24.6% in the first six months. However, the Fund is still up 96% overall, returning 12% per year on average, compared to 0.6% per year on average for the FTSE 100 during the same period.
The best performer in the Fund is still Safestore Holding, which has more than trebled returns for investors since Q3 2016 when it entered our Fund. However, it was the worst performing share in Q2.
The biggest loser still looks a Safe bet
Despite falling by 19.7% and being the worst performing share in our Fund in Q2, Safestore Holdings, which has locations in Europe and the UK, actually saw a growth in revenue and occupancy in the six months to the end of April 2022. Total revenue for the period was up 14.6%, profit before income tax (excluding gains on investment properties) was up 54.8% and the dividend this year is going to be 25.3% higher than in 2021.
Three more sites have been acquired in the greater Paris area providing a total of 134,000 sq ft of storage space, and a 58,000 sq ft site has been acquired in the Netherlands. The Group now has a development and extension pipeline of 23 stores with almost 1m sq ft of leasable space. The occupancy rate increased from 81.9% to 82.3%. Safestore also decreased its group LTV from 27.4% in April 2021 to 26.8% in April 2022.
With all this positive news, it is hard to fathom why the share price has fallen so dramatically over the past three months. However, the company did warn in June that there could be ‘inflationary and cost of living pressures’ ahead that could impact the business environment.
Safestore has 178 self-storage facilities in the UK, France, Spain, the Netherlands and Belgium, which offers investors some exposure to the euro, which will boost returns if sterling were to weaken. Its storage properties comprise of nearly 7.7m square feet of storage space and serve around 90,000 customers, so cutting it from our Fund simply because it has had a bad quarter would make little sense, especially as it has been returning around 36% a year (dividends and share price rises combined) since entering the Fund almost six years ago.
