Lok'n Store Share Discussion Threads

[wan] 04/6/2007 07:54

The pipeline expands further, but 'importantly' the valuation methodology has been underscored, these self-storage buildings are indeed valued for their cashflows and not just the building!

Regards, wan

[vassily] 31/5/2007 14:44

Good luck Wan and nice to see you maintain an interest.

[mitzis] 31/5/2007 10:17

Good luck to you wan and I dont blame you for reducing as things stand.

[wan] 31/5/2007 10:03

All...After 'much' deliberation, I have decided to reduce my holding in LOK. Some of the proceeds have finanaced this years stock ISA allowance, which in part drove the decision (LOK is not yet ISAble) along with personal stuff and further stock market investment elsewhere. There is still plenty of potential left to realise here (plus a dividend), hence I have maintained a holding, which subject to funds and monitoring could change in either direction, but most likely upwards.


Regards, wan

[vassily] 30/5/2007 11:45

Maybe you'll get your wish this week.
LOK lacks news.

[kievtrader] 29/5/2007 14:31

whole sector - SAFE and BYG weak. I would want LOK to fall back to 260p before I think of buying. Short-term the shares look week on persistant selling

[vassily] 25/5/2007 10:54

Wan:
I agree. The future is relatively bright. Those who focus more on the market, rather than the company, may miss out.

[wan] 25/5/2007 07:51

Obviously quite a few holders have been shaken out by the prospect of higher interest rates, but the question has to be though will that significantly impact the growth of self-storage? It might pull the growth numbers back a bit, but there is a hell of lot of demand for housing out there.

Even if we assume that house prices pull back, that will surely assist those waiting and saving ie their deposit will go further. Put simply the UK is not building enough houses by far, and that is something that cannot change very quickly if at all. So I see perhaps slighty better affordability and stabilisation and not a collapse.

On the business front, I can only see increasing demand for self-storage, legislation and flexibility makes self-storage a very desirable tool to businesses large and small and comes into play in just about all scenarios, and LOK has been recording revenues of circa 50% coming from the business side.

Yesterday we entered oversold territory, so some will or maybe thinking is this a trend change or a pull back? Surely though we need to apply that thought to the self-storage sector, which is growth industry growing at double digtis rates year on year, a trend that is not set to change due many supporting factors, add in the fact that LOK is one of just a few strong UK players, and things perhaps look a bit different. Not to mention the dividend commencement as indicating what the future might hold.

Monitoring with intent, wan

[wan] 23/5/2007 07:42

All...I note that yesterday it was announced that Audley reduced their 2,720,000 holding by 65,000, the transaction date was 18th May, which I cannot see the trade for. Perhaps it was exucted before in parts and completed on the 18th May then, or will there be a counter announcement? With Dresner Bank and Town Centre Securties the most recent acquirers it could be one of those, in any event the market wanted/absorbed the stock. Other than that, given where we are heading, in that I include commencement of a dividend policy and REIT status (eventually), then it is likely LOK have come onto other institutions radars screens (even if that means picking up stock in parts). Which if you take the comment/quote from the recent British Land results, "real estate's growing cash flows positioned it between bonds and equities in the hierarchy of returns on capital." then self-storage really does fit the bill given the higher yield (as evidenced by BYG results), but given LOK's valuation and growth curve, there is perhaps more on offer.

By the way, if you take a look at my previous posts regarding Audley, it is perhpas obvious that they are not exactly a long term investor, maybe more a mover and shaker then? Food for thought.

[wan] 22/5/2007 09:13

Sirhokko...Good morning. I traded BYG very successfully, I bought in when they announced they had been unable to reach agreement with HMRC on REIT status and the share price got a bit of a hammering, the rest is history and I no longer hold BYG. I prefer smaller well run companies that offer substantial growth, which I believe LOK does offer (cue the recent interest/holdings). The introduction of REIT's adds another dimension here going forwards, and I believe that LOK converting to a REIT is inevitable, albeit further out, with perhaps the introduction of a maiden dividend as another indicator that the process has begun. The building of the new store was a pivotal point and totally managed by LOK, the roll out programme will have a more significant impact though. LOK is substantially undervalued when compared to the likes of BYG on a per sq foot basis and I know there is always going to be a discount etc, but it still looks too harsh.

Regards, wan

[johnrxx99] 22/5/2007 09:03

Wan, just like to second that.

[sirhokko] 22/5/2007 08:41

Hey wan, just wanted to say that I appreciate your posts. Not much banter on here but I do read and value your opinion.

I have been watching BYG for some time and more recently LOK. But have not yet taken the plunge with either. Really had trouble valuing them, although I have no doubts that self storage has plenty of growth left in it.

I assume you hold LOK and not BYG. Is that simply because you consider LOK undervalued in comparison or are there other reasons for your preference?

[wan] 22/5/2007 07:49

BYG have set a 'fair pace' of expansion, with both the lack of, and competition for the 'right' property holding back greater expansion. This underscores the value of existing self-storage portfolio's, and perhaps indicates that consolidation is a high probability if not inevitable? Shurgard should be announcing a public offering in Europe anytime soon, which may prove to be a catalyst event (they only had 18 UK properties). I believe there are interesting times ahead, LOK are certainly gathering momentum and I believe that they will record growth, in percentage terms, above that recorded by BYG. LOK has a nice property pipeline, circa £11m cash and a good banking facilities, but will LOK become a stronger player or a pawn? Their pricing is competitive, their model effective and the branding is excellent, so the ingredients and indeed the market are all there for a v/strong player to emerge from here.

[wan] 21/5/2007 07:24

BYG not coming off the gas, reporting strong growth -

Revenue increase of 22% in the year

"We are currently enjoying good trading conditions and we expect this to
continue into the summer."


I also noted the following -
this is an institutional asset class in North America and Australia, and
is growing globally and will benefit from increasing institutional interest
in the UK particularly for purpose built, well located modern facilities.

Which also fits well with LOK's new store build programme.

[wan] 17/5/2007 07:26

KT...I disagree that the trading statement from SAFE (over a week ago)) had much or 'anything' to do with yesterdays pullback, which affected most property related stocks. It was in fact the banks inflation report and indeed comments from the Governor of the bank which suggested that another rise would be needed 'late' this summer (cue my previous comment/post on interest rates last month). Along with Land securities comments on capital growth. Anyway it was interesting that the market focused purely on the rate rise suggestion itself and not one of the reason for it, which was quoted as "the economy was expanding at a rapid pace" and "that strong growth appears to be continuing into the second quarter of this year". Self-Storage is a very different property asset, it's yields are far above what the likes of Land Security gets for leasing a warehouse, hence both Lok'n Store and indeed the much larger Safestore have successfully operated properties that are leasehold, with both location, 'brand' and indeed operational expertise playing their part. In short, self-storage properties, which are quite unique and difficult to obtain the right planning permissions for etc, and offer a far higher yield than the average commercial building, and thus will be valued for their 'cash flows' rather than just another warehouse etc.


KT, Safestore's trading statement confirmed that revenues had increased by 15.1% during the period, that is hardly sloth like. However, BYG's full year results, reported on Monday, is likely to record annualised revenue growth in the order of 20%. I believe LOK, will at the very least, be right up there with them, cue the full year dividend commencement, which perhaps indicates the type of growth that will be delivered.

All...I have said this before that the downside risk for self-storage, even in a higher interest rate environment is somewhat limited if you check the revenue generation, markets, demographics and the trend of house builders building predominantly smaller homes. For instance business storage, which forms a large percentage of revenue, provides an affordable stop gap, if not a permanent one in many cases. And if people decide not to trade up to larger houses and instead retaining their smaller homes, then their storage requirements actually become longer term, and not just hinged around moving house. In the mature US market households routinely use self-storage for the long term.


Planning at Reading.
I have looked quite closely at this. As I posted previously -

30th May 2006 planning for 120 units refused
Appeal lodged and validated 19th March 2007

New application for 112 units validated 28th March 2007, decision pending with a target/decision date 27th June 2007.
(end)

If you have the time to read the reasons for refusal on the first application (a long document) where the application was also criticised in parts (praised in others) for lack of specific detail, then the new application appears to address 'everything', along with 33 separate documents addressing, 'in detail' the specific area's (and more) raised by the original refusal. Here is the link to the documents (you may have to sign up to the public access rights etc) -


So we have an appeal lodged and a new/revised application pending, which in my book is strategically good. For the record I am of the opinion it is more a case of when and not if permission is granted, but please do your own research in order to make your own assessments as to the likelihood of the planning outcome. In the meantime, as epitomised by Safestore's trading statement, BYG fy results on Monday, and a robust economy, it will be a case of brisk self-storage business.

Takeover target.
With LOK already undervalued per sq ft compared to BYG and SAFE, along with 'accelerating growth', I believe that some downside protection will prevail, because any share price weakness will make LOK blip 'even louder' on radars at the 3 players above it in the UK Self-Storage market, especially no 2 & 3 (Access & BYG), who would then, along with their pipeline, be vying for the no 1 slot in the UK along with SAFE, interestingly Shurgard Europe, the largest European player, only had 18 UK properties in 2006, so LOK could put them on an equal UK footing with the other players. Both SAFE and Shurgard have experience on integrating acquisitions, for instance in a report on Safestore's public offering, under key developments -

Safestore To Consider Acquisitions
Safestore Holdings Ltd confirmed it intends to proceed with an initial public offering of its shares and a listing on the Official List of the London Stock Exchange. Over the next five years the group said it intends to add between 7-10 stores per annum. In addition, the management team has a proven acquisition track record and will continue to consider acquisitions as an additional route to growth.

In short there could be more than one interested party 'if' any interest is declared, but importantly we do not want to dwell on or rely on the takeover element, because the longer term offers far greater rewards than a 20 or 30% premium. Please conduct your own research though as my opinions and/or research could be either wrong or inaccurate.


Regards, wan

[kievtrader] 16/5/2007 16:01

Less than exciting trading statement from SAFE ahead of results taking bothe BYG and LOk lower. Presents a good new entry level for LOK ahead of possible June announcement re Reading which should take stock over 300p. KT

[wan] 14/5/2007 12:32

Edit to the above, apologies I forgot to inlude the link to the PSA/Shurgard document.

[wan] 14/5/2007 11:25

Mitzis...I am not sure I would describe it as exciting, just interesting.


All...The interest this Summer is not just contained to the UK though (as I detailed above), because PSA have been evaluating various financing alternatives to position Shurgard Europe for long-term, sustained growth, including a possible initial public offering in Europe. Subsequently during the second quarter of 2007, PSA expect a share offering of Shurgard Europe, where they expect to reduce their ownership in Shurgard Europe, but will retain a significant equity interest.

Here is the original Public Storage / Shurgard Merger and Strategic Rationale document, page 8 details Shurgard's European Portfolio (at September 30, 2005) -


With further consolidation widely expected within the self-storage industry (not to mention REIT's), will Shurgard Europe be a player in that, or will market share come from accelerated/organic expansion? Anyway if the US is anything to go by, things look set better than fair in European self-storage, and in that I include the 'densely' populated UK.

Regards, wan

[mitzis] 14/5/2007 09:01

Exciting indeed wan the next couple of weeks will be interesting..

[wan] 14/5/2007 07:31

We have an interesting Summer ahead (for a change)

BYG report a week today.

In June we should see a decision regarding the 'revised' planning application at Reading.

In July SAFE report, and given their trading update, the self-storage sectors double digit growth rates will be a continuing theme.

[wan] 11/5/2007 07:26

All...Oakdene Homes results are worthy of note, they are focused on the South East ie where LOK has chosen to focus -

From Oakdenes results -
"We're also delighted to announce a successful share issue to help fund the
Group's future growth, the proceeds of which has been earmarked for the purchase of strategic new sites in the South of England."

The housing market was very strong for most of 2006 and our sales were largely
limited by the number of units available for sale. Our build schedule for 2007
will ensure that we have many more units available for sale. There is concern
that interest rates have risen and look set to rise still further. However, the
underlying position remains that there is a substantial lack of new housing
stock in the United Kingdom and this is particularly true in the areas of our
operations. Employment levels remain high, so we are confident that whilst the
market may stabilize there is unlikely to be any reduction in the sales prices
that we are achieving on our developments.

"Oakdene has raised its profile considerably in 2006 and the prospects for the
company remain exceptional" -



Regards, wan

[wan] 10/5/2007 12:15

Mitzis...By Monday week we will know, but fwiw I think BYG (and SAFE) will record double digit rates of growth, because as we know self-storage is a growth market, but I also think LOK will prove to have superior rates of growth, and that could well prove to be the case for a number of years to come.

Just like LOK's 'strong' brand, their maiden dividen will no doubt draw attention too.

[mitzis] 10/5/2007 09:38

Big Yellow trading up 20p today ahead of the results next 11 days but what about Lok..

[wan] 08/5/2007 07:18

Encouraging trading statement from Safestore with sales up 15%, although LOK's dividend commencement provided for a certain level of encouragement of our own.


BYG will report full year results on 21st May (I like Monday reporting), which will provide for another, and in my view, positive indicator.

[wan] 03/5/2007 08:27

Is there a pattern emerging here? The shares are marked up before the open, tempting some sellers into the market, the point is why are they being marked up on no visible trades? fwiw I think there is still quite a bit of underlying demand at just under 300p, time will tell whether the 300p threshold can be broken, I remain patient.

Regards, wan