Shurgard Self Storage Ltd

XBRU:SHUR

Earnings Call Analysis

Strong Q3 Performance Fuels Upgraded Revenue Guidance

In the recent earnings call, Shurgard reported an impressive 16% year-on-year revenue growth for Q3, greatly benefiting from the integration of Lok'nStore and acquisitions in Germany. This robust performance has prompted the company to revise its revenue guidance, projecting at least 12% growth for 2024, up from the previous estimate of 8%. Shurgard anticipates that all-store NOI will align closely with revenue growth, reflecting the successful execution of its strategy.

Success of Lok'nStore Acquisition and Occupancy Growth

The acquisition of Lok'nStore, finalized on August 1, has been a pivotal development, allowing Shurgard to effectively double its market presence in the UK. Following the rapid integration, occupancy has climbed to 69.2% within just two months, with an ambitious target to reach 90% by December 2026. This achievement underscores the company's operational excellence and its ability to capitalize on acquisition opportunities.

Consistent Same-Store Performance Reflects Pricing Strategy

Shurgard's same-store revenue grew by 5.2% in Q3, showcasing stability amidst fluctuations in various markets. The overall occupancy rate remains strong at 90.4%, with average in-place rents increasing by 5.5%. This indicates effective pricing strategies are sustaining revenue growth, as customer demand appears resilient despite slight discounting in specific locations like London and Germany.

Ambitious Growth Pipeline Secured for Future Expansion

Looking ahead, Shurgard has secured an extensive growth pipeline of over 400,000 square meters for the years 2024 to 2026, representing nearly 30% of its total size from 2023. This includes a significant investment of EUR 1.2 billion versus anticipated returns of 8% to 9% at maturity, projected to contribute an additional EUR 100 million in NOI annually. The roadmap encapsulates both organic and potential future acquisitions, emphasizing the company’s growth-oriented strategy.

Solid Financial Health and Balanced Capital Structure

Shurgard maintains a strong balance sheet, characterized by low leverage and significant liquidity, with an LTV ratio of 24.1% and net debt to underlying EBITDA at 6.4x. The company recently executed a successful EUR 500 million bond issuance, enhancing its financial flexibility. Despite a temporary deviation above its medium-term debt target, Shurgard remains focused on returning to a net debt to EBITDA ratio of 4-5x.

Maintaining Shareholder Value Amidst Growth Initiatives

While the adjusted EPRA earnings reached EUR 123.5 million for year-to-date—a 7.2% growth driven by consistent operational performance—the EPS is expected to remain slightly below last year due to a 9% increase in shares following an equity raise. The decision for an optional scrip dividend has been well received, with 80% of shareholders opting for shares, signaling strong investor confidence amidst the ongoing growth initiatives.

Earnings Call Transcript 2024-Q3

[Operator]

Good day, and welcome to the Shurgard earnings call. [Operator Instructions] It is now my pleasure to turn the conference over to Caroline. Please go ahead.

[Caroline Thirifay, executive]

Thank you, Erika. Good morning, everyone. Thank you for joining us for the Q3 2024 results. I'm here with Marc Oursin, Jean Kreusch and Thomas Oversberg.

Before we begin, we want to remind you that all statements other than statements of historical fact included on this call are forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected by the statements. These risks and other factors could adversely affect our business and future results that are described in our earnings release and in our publicly-reported information. You can find a press release and an audio webcast replay of this conference call on Shurgard.eu website. We had some connection issue during the trial, if that happens, we will drop the line and reconnect.

With that, I will turn the call over to Marc.

[Marc Oursin, executive]

Thank you, Caroline. So let's go on Page 2, which is an update of the year-to-date September results. Starting with the continued growth across all markets, if we focus on the all store revenue. So the year-to-date reached 10.8% as a growth with an acceleration in Q3 with 16% which is, by the way, supported by large portfolio expansion in the U.K. and also our three acquisitions that we did in Germany.

If we focus on the same stores, the same store did 4.17% growth year-to-date with also an acceleration in Q3, reaching 5.2%. If you break down this within the volume and the value effect, the volume effect, we have a high average same-store occupancy of almost 90% slightly 89.8%, with a slight increase of 0.3% on the net rented versus last year. And if you look at the value effect, our same-store property in-place rent was fueled by positive pricing dynamics, enabling a 5.3% year-to-date average in-place rent increase. So therefore, we had a very strong top line growth, fueled by expansion and of course, the performance from our same stores coming through the pricing dynamics.

If you go to the next slide, Page 3. So the graphic shows you the continuing positive trends of the previous quarters. If you focus on the red line, which is the year-to-date -- sorry, the revenue growth year-on-year. And if you look at specifically in the past 4 quarters, so the rolling year from Q4 '23 to Q3 '24 you see that this growth has been for each quarter between 4% and slightly above 5%, so very resilient. And at the same time, demonstrating the stable and efficient market dynamics that we have in our geographies.

Now let's go to the rest of the P&L for the year-to-date and the quarter. So our same-store NOI margin grew to 66.7%. So an improvement of 0.3 percentage points versus the first 9 month of '23, so reflecting the positive impact of the digitalization initiatives on our cost structure. And meanwhile, our all-store NOI grew in line with our revenue growth by 10.2% with our revenue growth of 10.8%. At the same time, of course, we have an increase of our interest expenses due to the Lok'nStore bridge financing. And the -- on the top of that, we have kept a stable effective tax rate meaning that our adjusted EPRA earnings reached EUR 123.5 million, which means a growth of 7.2% versus last year. knowing that Lok'nStore earnings are being neutral earlier than anticipated. And the earnings per share actually is stable, resulting from the dilutive impact an effect of the November '23 equity raise that was representing an increase of 9% of new shares.

So again, very powerful and strong operational execution driving the strong margin and earnings growth. If you go to the next slide, talking about our pipeline. So our future growth is supported by this attractive potential developments, what we call pipeline and secured. So the delivering new capacity for the year '24 to '26. So current year and the coming 2 years, represent more than 400,000 square meter, which is close to 29% of our size, I would say, in '23. So the net rentable. This physical growth represents an investment of EUR 1.2 billion of direct project cost. The expectation of the returns at maturity is actually between 8% to 9% yield which represents an additional NOI of EUR 100 million per year at maturity. So want to remember, it is massive. It is actually delivering very nice yield, and it is secured.

If you go to the next page, where you see how this pipeline has been evolved. And secondly, how it has been spread for the, it is spread -- sorry, for the coming 3 years, the current '24 and '25 and '26. This is the red bars that you can see. And you see that the amount or square meters is very significant in '24, reaching 235,000, already secured almost 59,000 square meter for '25 and 110,000. What is interesting to notice, if you take the average of these 3 years, we are on average per year at 135,000 a year, which is more or less double than the average of the previous year's '23, '22 and for sure '21. So knowing, by the way, that this secured pipeline does not integrate any potential bolt-on on acquisition that could take place in '25 and '26. So clearly over delivering our guidance.

Then specifically, if you go to the next slide, so Page 7, regarding our Q3 numbers. So -- and shortly. So revenue growth, yes, plus 16% year-on-year also coming from the acquisition for 2 months out of 3 in our accounts from Lok'nStore of 37.4% in the U.K. And in Germany, the benefit of the acquisitions that I mentioned plus 42.8% and with a double-digit growth in the Netherlands and also other markets performing very well. Meanwhile, the NOI grew by 14.9% on the quarter with a stable payroll costs for our same stores and therefore, the acceleration coming from the of portfolio expansion. More specifically for the same store revenue grew by 5.2%. And again, here, if you look at the volume aspect of it, occupancy reached 90.4% with an increase of 0.7%. Also, if you remember, 0.3% for the year-to-date, so a slight acceleration here. And for the in-place rent, a pretty good performance of plus 5.5% and again, demonstrating our pricing model efficiency.

Meanwhile, the adjusted EPRA earnings bottom line grew by 6.4% or reaching EUR 45.3 million. And of course, we have the impact, as I said, about the financing needs for a Lok'nStore. So all in all, a significant acceleration of revenues and margin, same-store and acquisition. And on this, I turn to Jean. Thank you.

[Jean Kreusch, executive]

Thank you, Marc. Now on the back of a very strong third quarter results from our existing stores combined with the impact of the Lok'nStore acquisition, we are revising our outlook for the year 2024 at constant exchange rate. We are now guiding towards all store revenue growth of at least 12% for the year 2024 versus 8% previously. Our all store NOI growth will be nearly aligned with the revenue books. We will deliver circa 235,000 square meter or 17% of our 2023 net rentable square meter, investing EUR 750 million. Finally, we have now forecast our adjusted EPRA earnings to be in line with consensus prior to Lok'nStore acquisition. Indeed, we are now expecting the impact of the acquisition on the earnings to be neutral in 2024.

Finally, the adjusted EPRA earnings per share will be impacted as foreseen following the November 2023 equity rate. Our guidance around income tax rate, dividend and disciplined financial policy on Page 9 have not changed. On Page 10, we are very pleased to one more time demonstrates the capability of our platform to drive strong top and bottom line growth through our operational excellence and our capacity to integrate extremely fast our acquisitions into our proven model. In the third quarter, with Lok'nStore numbers in for 2 months, our revenue total company has grown by 15.8% or NOI by 14.6% and our EBITDA by 12.8% when compared to last year at constant exchange rate.

While adjusted EPRA earnings reached EUR 45.3 million for the quarter and EUR 123.5 million for the year-to-date. An increase of 6.4% and 7.2%, respectively, at constant exchange rate. Finally, our adjusted EPRA earnings per share is $0.01 lower than last year for both quarter and the year due to the equity raise we did end of last year. On the next page, we show an acceleration of the same-store property operating revenue growth at 5.2% at constant exchange rate for the quarter versus 4.7% for the first 9 months. For the quarter, the occupancy at 90.4% remained stable, while the average in-place rent at constant exchange rate grew by 5.5%, demonstrating once again the strength of our revenue management model based on occupancy.

On a country level, all the countries are showing positive revenue growth for the quarter. On Page 12, we continue to have a growth-oriented balance sheet with low leverage, spread maturities and a weighted average interest rate of 3.27%, including the bonds we issued in October. On Page 13, to further look at our balance sheet with a modest level of gearing and significant liquidity, let's go over some highlights. First, we are the first and only European self-storage operator with BBB+ stable investment-grade rating. Second, in September, shareholders opted for a dividend in shares for a total of 80% of the dividend rights. Third, on October 22, we had a massively successful inaugural EUR 500 million [ 10-year ] bond issuance with a fixed coupon of 3.625% to pay out the Lok'nStore bridge financing.

Finally, we still had EUR 161 million of cash available, an LTV of 24.1% and a net debt to underlying EBITDA of 6.4x. On Page 14, I would like to come back on our bond issuance which allows us to further diversify our financing sources. We have been able to attract a growth and diversified high-quality investor base as evidenced by an order book of EUR 4.6 billion at peak with an oversubscription ratio of 9.2x. The new [ 10-year ] bond was priced at a very attractive spread of 135 basis pounds to Mid-swap. Now back to Marc.

[Marc Oursin, executive]

Well, thank you, Jean. And let's go to the next slide, so Page 15, focusing on the acquisition of Lok'nStore on August 1. So as a simple reminder this acquisition allows Shurgard to double its presence in the U.K. and represents 2 years of growth in terms of square meter for the total company. We have both 27 properties based in London, Southeast and greater Manchester regions. Then the key point is that with this integration and which was completed just 2 days after this August 1. And we have been able to grow the occupancy to 69.2% after 2 months for all these 27 properties, knowing that when we took over it was 67%.

So again, demonstrating a positive start of the integration, which is a great achievement and targeting an occupancy of 90% over the 2 years ending by December 2026. What is interesting also, and this is something that we are discovering because we're not in these regions previously, that the customer dynamics are the same to London. After a couple of weeks, we have reached, I think, 45% of our new contracts done with e-rental and in London, where we are close to 50%. And we are clearly on track also to deliver our expectation of synergies, which is EUR 4 million to EUR 5 million of savings on the cost and tax in the first full year. And the news that we also disclosed today is the fact that Lok'nStore now is expected to be earnings neutral in '24 after the successful refinancing that Jean mentioned and went through versus the initial guidance that was mid-single digit negative for '24.

So the target is clearly to deliver our 8% NOI yield within 5 to 6 years down the road. So as a conclusion, if you go on Page 16. So actually, a couple of things. On the operational execution excellence, I think, again, the fact that we are raising our guidance plus the revenue growth across all the markets on our same-store specifically. And the leading commercial platform, meaning the top line and the operational cost management is a clear demonstration of this excellence. Secondly, the '24 growth acceleration, the successful integration of Lok'nStore, which is the main key event for us for the year '24, besides the bond issue. And Germany, the successful acquisition of Prime and Pickens during the course of the year.

Talking still about pipeline, we have secured '24, '25, '26 with a very significant pipeline. So for more than 400,000 square meters which is close to 30% of our total size in '23. I want to remember, EUR 1.2 billion value of investment with this return of 8% to 9% of maturity, which is as I presented earlier, EUR 100 million of maturity of additional NOI for the company. And as Jean explained to you, we have a very strong balance sheet with a modest level of gearing and significant liquidity. I mean this year has been really great in the sense that we got and we were the first self-storage operator to get this strong investment grade, BBB+ stable outlook. We did this optional scrip dividend, and we got 80% opted for that from the shareholders, which is also a very significant achievement. Then a successful issuance of our first bond with a fixed coupon of 3.625%, which is also, we think, a very good performance.

And last using this money to reimburse in full of the Lok'nStore acquisition bridge loan, which is removing 1 uncertainty of this acquisition. So again, demonstrating that Shurgard is the growing #1 platform and brand in Europe with operational execution excellence. So on this, I turn to you, Caroline, [indiscernible] with question.

[Caroline Thirifay, executive]

Thank you, Marc and Jean. Now we open the lines for your questions.

[Operator]

[Operator Instructions]. We'll take our first question from Marios Pastou from Bernstein.

[Marios Pastou, analyst]

Just a couple of questions from my side. Maybe firstly, going into the guidance, I'm assuming your guidance is referring to on earnings per share. And how does that translate into a more explicit earnings per share guidance, let's say, this year versus last year based on Lok'nStore turning more neutral?

And then secondly, your same-store revenue growth trends, they've been notching up over the last few quarters. What you've seen already say in Q4, in October, how do you see this extending into maybe the fourth quarter of this year?

[Marc Oursin, executive]

Jean, do you want to take the first? I'll take the second.

[Jean Kreusch, executive]

Yes. So earnings per share, we're guiding towards like where the consensus was back to -- prior to the Lok'nStore acquisition. So we still expect to be slightly below last year due to the impact of the dilution per share, the dilution of the ABBs we did in November last year.

[Marc Oursin, executive]

And Marios, regarding the trend we see for the, I would say, already the first weeks of Q4. It's good in the sense that we are on track with what we have seen in the previous quarters for the -- I'm talking the same stores.

[Marios Pastou, analyst]

Okay. Very clear. So the 9-month earnings per share number is a good proxy for the full year in terms of the reduction year-on-year.

[Marc Oursin, executive]

What are you saying that the good proxy would be?

[Marios Pastou, analyst]

Sorry, just on the earnings per share, you've seen over, say, the first 9 months of this year, is that a good proxy for, say, the full year, if it's going to be slightly below last year on a per share basis?

[Jean Kreusch, executive]

Yes. And I think you just need to take into account the weighting of the ABB with it last year.

[Operator]

And we will go next to Frederic Renard from Kepler Cheuvreux.

[Frederic Renard, analyst]

I got just -- acquisition, sorry, [indiscernible] it seems that you are with several acquisitions. You haven't announced a new one this morning. How do you see the current capital structure as a risk of slowing down to future appetite? I will ask after that.

[Marc Oursin, executive]

Okay. So the line is not that great, Frederic. But -- so what is our capital structure, which is the appetite of M&A?

[Frederic Renard, analyst]

Yes.

[Marc Oursin, executive]

So here, no changes. I mean we have said that if you take the current disclosing of disclosures, sorry, of Q3, our LTV is perfectly in line, that's between 24% and 25%. And the debt over EBITDA, we are at 6%. And we have said and we stick to that, that our guidance medium term is to go back to below 5x. So we -- as soon as we see some bolt-on acquisitions that are making sense and keeping these guidelines for the leverage in mind, we will do that.

[Jean Kreusch, executive]

Yes. We still have plenty of capacity on our balance sheet, Frederic. So there is no issue from that point of view. I mean, we are perfectly in line with our guidance from an LTV point of view. So -- and we always said that we could go above 25% if the right acquisition was there. So we can go up to 35% for the right acquisition. So there is no stress from that point of view.

[Frederic Renard, analyst]

Okay. And then how do you cope with your net debt-to-EBITDA guidance?

[Jean Kreusch, executive]

Well, net debt to EBITDA, I mean, it's going to go progressively. It's going to go back between 4% to 5%. I mean, I remind you that the acquisition we did with Lok'nStore, it's unmature portfolio. I mean still in ramp-up. So the EBITDA is going to grow as the portfolio Lok'nStore ramp-up. And we also implemented the script. So all those elements are going to allow us in the next couple of years to go back between 4% and 5%. Also, typically, I mean, Lok'nStore was a bit unusual from that point of view as more than 40% of the store well less than 2 years, 2 to 3 years. So they are very, very young and mature portfolio from that point of view. Most of the acquisitions that we typically do are around 70%, 75% and therefore, have a much less impact on our net debt to EBITDA.

[Frederic Renard, analyst]

Okay. Understood. And maybe on luck, is the occupancy rate that you disclosed, which is a 69.2% in line with your initial thoughts? Or is it better? Is it a bit lagging?

[Marc Oursin, executive]

Yes, here, I mean, again, if you look at the other way around, which is what was the starting point and where we want to be by December '26, we are saying that when we took over on August 1, we were -- that this portfolio, I mean the 27 stores were at 67%. And as Jean mentioned, you have a group of stores, let's say, above 80%, a big group recently opened, I would say, below 40%. But the 67% is supposed to go to 90% till on December '26, which means more than 24 months. So which means that we need to gain a bit less than 1 percentage point of occupancy every month. So that's the trajectory in which we are. And for the time being, we are on just after 2 months.

[Jean Kreusch, executive]

I would say it's pretty positive from that point of view because typically when we do acquisition, it's not always at all -- at the beginning.

[Marc Oursin, executive]

You have to do some clean up. So you have always usually a little [indiscernible].

[Frederic Renard, analyst]

Okay. That's clear. And maybe a last one on your NOI. So in H1, you are targeting a stable NOI margin. I don't think you mentioned that again, but you said that NOI will grow in line with the growth of revenues. I'm just wondering what does that mean? It means that Q3, which is 40 bps below last year, is it what we can expect for the year-end?

[Jean Kreusch, executive]

Yes. Yes. I mean the -- I think it's -- yes, the NOI will grow in line. So -- but it means that will be slightly below compared to last year in terms of NOI margin [indiscernible]. Again, here, the impact of our Lok'nStore is really driving that because as I mentioned earlier, it's a mature portfolio, low occupancy and therefore, lower margin because it's still in ramp up.

[Operator]

Thank you. And we will go next to John Vuong with Van Lanschot Kempen.

[John Vuong, analyst]

Just a follow-up on the Lok'nStore acquisition, just maybe slightly different frames. You mentioned that it is now expected to be earnings neutral. So what has exactly changed compared to the underwriting? Is it performing better than anticipated? Or is this solely driven by the refinancing?

[Thomas Oversberg, executive]

Yes, this is Thomas here. So I think there are indeed 2 aspects. I think we see the biggest impact from the refinancing, which we -- if you remember a few months ago, when we talked last time, we were more aiming at what we will hoping to get in the region of 4%, but we were clearly not there, especially not when we were doing the underwriting in earlier this year. So that is really the biggest part of that. But besides that, we also see a good performance of that. So I think that's a good combination. But the biggest part is coming from that.

[John Vuong, analyst]

Okay. That's clear. And then on the [indiscernible] short acquisition that you announced this morning, could you confirm whether the yield -- the expected yield at maturity of 7.5% is net of the loss management fees that you're no longer getting?

[Jean Kreusch, executive]

Yes.

[John Vuong, analyst]

Okay. And then third-party management in general, now that you've acquired one store. Do you see more -- do you see scope for more owned stores? Or -- now what is the strategy here going forward on third-party management?

[Marc Oursin, executive]

The people in the room here are looking at me, I don't know why. So John, thank you for that question. So first, it's a bit early to give you the complete strategy regarding this third-party management. What is for us, it's kind of not discovering, but due to the size we're talking about 17 properties. This is quite significant for us. Secondly, if there are some of these properties are, I mean, great location, great building, with good potential or highly occupied and in geographies where we have already properties for us in the pricing is delivering the returns we're expecting.

It's good to buy. And Aldershot is typically the case because Aldershot will allow us to do a cluster with the Farnborough and the Camberley sites that we have. So you create more efficiency in your portfolio. So that -- and much more than the fees you are making as manager of it. Having said that, we have partners and one of them is time. That's the name of one of our third-party management partners or owners, if you prefer. They have 12 properties. And we will assess with them the situation for the future and come back to you guys with -- and being able to answer better this question with the full year disclosure by the end of February.

[Operator]

And we'll go next to Florent Laroche-Joubert with BHF.

[Florent Laroche-Joubert, analyst]

I would have two questions. My first question would be on the opportunities on your view -- on the opportunities that you can see now in the short term on the investment market? And if you can give us maybe some additional growth on your pipeline for new acquisition in the short term? And my second question is maybe more on Sweden. So we can see that the trend is improving. Could we -- could you please confirm us that we can consider that this improved trend as sustainable for the next quarters?

[Marc Oursin, executive]

Yes, okay, Florent. Thank you, Marc speaking. So regarding your first question, so how the investment or, let's say, the M&A market is short and medium term. As we told you already a couple of times, our expectation is to see in the coming years, medium term to see more probably portfolios on the market due to simply the maturity of the industry, meaning that the owners, the industry is very fragmented. Most of the portfolios are in the hand -- I mean, smaller portfolios or even properties are in the hands of their founder. These people now are turning to their 60s, and most of them are happy to cash in.

So we are expecting to see on the bolt-on side, more potential deals for us or for others, which is, I think, good. And secondly, short term, for the time being, or very short term. We have a lot to digest, I would say. So -- but you never know what could take place. But I would say that the level of activity should be still decent for us in the coming 12 months. That's your part one. Secondly, for question one, sorry.

Secondly, for Sweden, yes, Sweden, it's really good news. If you look at the occupancy, but also the revenue trend, the Q3 is really positive versus the previous 2 quarters or even I would say the previous 4 quarters, if you look at until '21 or '23, and even more. So yes, we are positive, and we believe that we will continue to pick up in Q4 of this year and also next year.

[Operator]

And we'll go next to Andres Toome with Green Street.

[Andres Toome, analyst]

So a couple of questions from my end. Firstly, could you give a bit more color perhaps on just how the like-for-like rate growth is composed of in terms of what are you seeing the quantum of growth in moving rates and then existing customer rate increases and how these trends are evolving.

[Marc Oursin, executive]

Okay. You want to take it, Jean? Okay. Thank you. So Andres, so we don't talk like-for-like anyway. We talk same store, of course, but -- so on the same store. So first, we do not really disclose the numbers of the move-in rate. What I can tell you is that regarding at least the ECRI. So the increase to existing customers here. We are exactly at the same pace than what -- I mean -- intensity. So the level of increases to existing customers is the same as in 2023. And quarter-on-quarter in '24, we are exactly on that level. So there's no real change, meaning that -- for the time being, we don't see a total European portfolio same-store, a decline of occupancy due to an increase of move-out ratio due to ending the application of these increases to existing customers.

So we don't see that. And secondly, on the moving rate, I would say that globally, it is also stable versus last year. We are exactly in terms of quarter year-on-year, more or less with the same kind of pace in terms of the evolution of this moving rates. And we have some markets where we have to do more discounts than others. I would say that probably in Q4, the U.K. what we call the U.K. same-store, which is London, to make it simple, we have experienced probably a bit more discount to keep the occupancy up, and Germany will face also probably the same phenomenon. While other markets, we are experiencing less discounts in order to keep the occupancy around 90%, which, of course, helps the in-place rent.

[Andres Toome, analyst]

That's clear. Could you also maybe give a bit insight into how move-in rates are versus in-place rates at the moment?

[Marc Oursin, executive]

At the moment, they are perfectly in line with what -- in terms of spread. In the U.S., our peearnings, Extra Space, Public Storage and others are disclosing that. For the time being, we don't. But what I can tell you is that it's perfectly in line with what we had last year. So it is stable.

[Andres Toome, analyst]

Understood. And then my last question is just the earnings per share and neutrality from Lok'nStore as well. And you mentioned that large part of it is from just better refinancing terms. But I just wonder also because you've done some acquisitions this year beyond the [ Lok'nStore ] acquisition and after that. So how much sort of income contribution is also coming from those other acquisitions, which are sort of helping to reach maybe some of that earnings gap, which otherwise would have been a negative...

[Marc Oursin, executive]

Okay. So I cannot answer right away to this. It's true that we have not disclosed that through the non-same-store NOI, but the non-same-store, you have also all the backlog of openings and acquisitions we have done in previous years. So I cannot give you the answer right away like this.

[Operator]

We'll go next to the line of Wim Lewi from KBC.

[Wim Lewi, analyst]

I've got 2 small follow-up questions. If I may start with the acquisition of the managed business from Lok'nStore. So you explained that there are 12 properties from one seller and that you're currently looking at some other overlap?

[Marc Oursin, executive]

Sorry, from 1 owner, not seller -- owner.

[Wim Lewi, analyst]

Okay. All right. Now the question really is about this cluster overlap. Can you give an idea of what kind of percentage of that 12% would be the case? And if that would then open up the possibility of a package deal? And then maybe why this deal was kind of isolated from that potential?

[Marc Oursin, executive]

Okay. So there is no overlap, except the one we have just bought because if you look at the geographies of where the Lok'nStore -- sorry, the ex-Lok'nStore, so the Shurgard outside London, versus the Shurgard that we had as [indiscernible] or walking out in Camberley, this owner called Time like the name time, time is passing by, there's 0 overlap. Why the shop has been on the market and it was in the hands of a single owner for reasons of succession within the family. And that's the decision that they took, and we have been able to make that deal. And here, there was not an overlap, but a clear complementary [indiscernible] versus the existing two Shurgard that we had outside London that were actually Camberley, first and others a bit northern.

So that's why. So the decision here is coming first from the owner, which who was -- who was, sorry, because it's done by a family and it was for succession reasons.

[Wim Lewi, analyst]

Okay. Clear. Okay. Then just a small -- just to get the model right is if I got it right. So the acquired stores from Lok'nStore which you now consolidated for 2 months, they will enter into the same-store statistics after exactly 1 year. Is that correct?

[Jean Kreusch, executive]

One full year. One full year.

[Wim Lewi, analyst]

So, 1st of August '25.

[Jean Kreusch, executive]

In January, after one full year. January '26.

[Operator]

We'll go next to the line of Samuel King from BNP Paribas.

[Samuel King, analyst]

Just one follow-up, please, on balance sheet and funding, but asked in a slightly different way. You've clearly had a pivotal year in terms of external expansion pipeline is sizable with over EUR 1 billion of CapEx requirements. And at the same time, net debt to EBITDA is above the medium-term guidance of 4 to 5x, although I appreciate that's still at a comfortable level. But with deleveraging in mind over time and being a bit more specific on target, it sounds as if there's scope to delever, would say, business as usual single asset acquisitions of around EUR 50 million per year. But at the same time, you're happy to keep balance sheet metrics ahead of that medium-term guidance for portfolio deals. Is that how we should look at it?

[Thomas Oversberg, executive]

Yes. So let's break that down. So the first thing, as Jean was saying before, we are very comfortable that we're returning to our really midterm guidance of 4 to 5x net debt to EBITDA in the foreseeable future. And as Jean was saying, the main reason why we're a little bit outside of that at the moment is because the acquired portfolio had a very low NOI because it's still in a significant ramp up. So we have 2 effects coming from pure operations. So we have NOI coming from the Lok'nStore portfolio. We have also the NOI coming from all of our developments. So that will naturally drive down the net debt to EBITDA.

And then as you noted before, we have done the scrip dividend, which will also help us to bring that down. So that's what's happening there. Then when we -- that means that we are very comfortable when it comes to future bolt-on acquisitions. And the main reason being is that typically, we acquire more mature portfolio. So the impact on both our LTV and the net debt to EBITDA will be much smaller than it was now. Ideally, it's almost neutral debt and obviously what the price we're paying, what we're getting in return. So -- but as we always said, on the short term -- short to midterm, we are feeling comfortable to be slightly above, the important point is we have a very strong rating and we want to stay in that rating parameter for obvious reasons.

So that's a little bit our guiding principle there. But we don't see that there is any concern with any of our normal bolt-on acquisition, which we fully assumed in our planning, and I don't think that there are any other concerns about other slightly bigger transactions as well because we feel that should be also doable.

[Jean Kreusch, executive]

And then with the brands, we've also proven that we have access to capital market. We have diversified our financing sources. So we're perfectly comfortable that we have plenty of capacity to seize another acquisition if that will come on the market. So we're not limiting ourselves at all.

[Operator]

And we'll go to Celine Soo from Barclays.

[Celine Huynh, analyst]

Marc, I've got two questions for you. The first one was CapEx. Can you confirm how much CapEx you're planning to spend in total on the pipeline? And how much is coming in 2025, and also how much room do you think you have on acquisition with your LTV post financing this CapEx next year? And the second question, Marc, can you remind us what is your current view on the need for an equity raise?

[Jean Kreusch, executive]

Equity raise. Can I answer the second question. So there is no need for an equity raise at the moment. And we have no desire to go there. As we said just a minute ago, we've been very comfortable on where we are on our financing abilities. The good news is that now really all options are available for us, not only in the debt market, which was very appreciative of what we do but obviously the equity market, but there's currently no need for us to go anywhere in the capital markets.

[Marc Oursin, executive]

So I'll take then, but any comments Celine on this answer? So I can go to the first part of your -- hope you are convinced to the first question. So the pipeline wise, so it's pretty clear. Actually, we have secured EUR 150 million of direct cost for '25. That's what we plan, meaning that on the top of this EUR 150 million, which is, I would say, organic growth, you will have -- when you look at the path, excluding this deal that we have done with [ Lar ] and the [indiscernible] Germany, we take an assumption of EUR 50 million a year for M&A bolt-on. So we think that you can carry on this EUR 50 million on the top of the EUR 150 million for '25, so on EUR 200 million total CapEx for q4 new square meters -- this way. And if you look at '26 we have already EUR 270 million that are secured in the pipe.

And this is potentially excluding also a bolt-on acquisition and at EUR 50 million that you could have in the year 2026. So being above EUR 300 million in '26.

[Operator]

[Operator Instructions].

[Caroline Thirifay, executive]

Yes. We have questions from the webcast. Vincent Koppmair from Degroof Petercam. With the upgrade of the Lok'nStore guidance for 2024, this imply that we can expect Lok'nStore to be already accreted by 2025 instead of 2026.

[Marc Oursin, executive]

The answer is yes. Our current expectation.

[Caroline Thirifay, executive]

Yes. Second question, could you share the latest EPRA NTA now including Lok'nStore?

[Marc Oursin, executive]

No. We haven't really updated our valuation on that. We only do that twice a year, and we are currently in the process of doing that for the year and including Lok'nStore portfolio. So you will get an update on that at the end of the year.

[Caroline Thirifay, executive]

Do you observe any evolution in customer demand with the recent higher pricing strategy?

[Marc Oursin, executive]

So there was not a higher pricing strategy. I would start with this. I think it's a misunderstanding. What we have said, maybe you are referring to this, the question is coming from Vincent, I think -- and I think you are maybe confusing with what we have said or we have not been clear enough, which is that we have increased our ECRI the past, I would say, 2 to 3 years versus what it was about 5 to 8 years. So if you remember, we're around 10%. Now we are close to 15%. But this is to existing customers, not to prospect and new customers. So we don't see any change in demand.

What is so interesting to mention is that the real demand, which is the number of people about looking for self-storage, so they go on the website, they click on the page where you have a property, you have size of unit and the price, we call this the SRT page, the store reservation page. And here, the volumes are still, I would say, the same than the year before, the first store in all the countries. So I would say good news there.

[Caroline Thirifay, executive]

Okay. We don't have any other questions from the webcast.

[Operator]

[Operator Instructions]. We do have a follow-up question on the phone line from Florent Laroche-Joubert.

[Florent Laroche-Joubert, analyst]

Yes. I would have a follow-up question on the acquisition of Lok'nStore for 2025. When you say that it will be equity in 2025, what is the assumption that you take into account for the occupancy rate of Lok'nStore?

[Marc Oursin, executive]

What do we say it will be accretive?

[Florent Laroche-Joubert, analyst]

Yes.

[Marc Oursin, executive]

Well, the assumption are pretty simple. It's an NOI, which is growing the cost of the debt related to this and the NOI is based on the growth of the revenue. This growth of revenue is based on the growth of occupancy of, as I said, more or less 1% of growth per month and having the confirmed synergies into the -- on the cost, which means the EUR 4 million to EUR 5 million for the fiscal year. So that's why Florent we are able to have a growth of NOI being clearly above the cost of financing. Are we done, Caroline?

[Caroline Thirifay, executive]

Yes. Thank you all for joining us today. We look forward to reconnecting in this venue soon.

[Marc Oursin, executive]

Okay. So thank you to all of you. And thank you for being with us today.

[Operator]

We'd like to thank everybody for their participation. This does conclude today's conference. Please feel free to disconnect your line at any time.