Royal Bank of Scotland has provided a £40 million revolving credit facility to AIM-listed self-storage company Lok’nStore to provide the company with funding for site acquisitions.
The five-year loan will replace an existing facility, also provided by RBS, which was due to expire in October 2016.
The new facility carries a margin of LIBOR plus 1.4-1.65 percent based on a loan to value covenant test. The margin currently stands at 1.4 percent. The pricing is reduced from the previous facility’s 2.35-2.65 percent, although LTV covenants are in line with the previous facility.
“This new banking facility with its substantially improved terms and structure underlines the financial strength of Lok’nStore with its modest gearing, valuable property assets and strong and growing cash flow,” said Andrew Jacobs, chief executive officer of Lok’nStore Group.
“It will save approximately one penny per share per annum of funds from operation, lending support to our ability to pay progressive dividends, and will enable the group to continue to execute its current growth strategy with three new stores opening over the coming months.”
According to the Federation of European Self Storage Associations’ 2015 report, which was compiled alongside JLL, there were more than €400 million of transactions in the European self-storage market in the last year, including a mix of portfolio and individual asset sales. The average rent across Europe is €340 per square metre, it added.
However, the report quoted one market figure who said debt can be difficult to source. Martin Gerhardus of MyPlace said: “Debt providers are still overly cautious of the sector. They have no idea what the product is so debt financing is always an issue. We own half of the modern self-storage facilities in Germany – you can imagine how many bank managers understand the sector.”