Shurgard Defending the moat weighs on short term profits

We believe that the cautious outlook at the results on 26/2 is related to new developments from the LNS acquisitions that are added to the All-Store income at low initial Occupancy and YoC%. Shurgard now expects the EPRA EPS growth to average between 6-8% over FY27-30 (10% KBCSe). Shurgard continues its UK expansion with the completion of 5 developments (LnS pipeline) and 1 from its original pipeline in FY26. These completions have an impact on its short term all-store metrics as new developments demand an aggressive pricing policy to get occupancy up. It can take up to 5-7 years to lift the YoC% on new developments increases from negative to double digit. In other regions like Germany and the Netherlands competition also increased from private equity funded companies and cannibalisation. We adjust our EPRA EPS26-28 estimates downwards by 2.3%, but cut our TP significantly from €48.0 to €36.0. SHUR is trading at a discount to NTA per share of >50%, which we believe still offers an interesting opportunity.