Report
Shurgard There is more value creation than meets the EPRA eye
After the LnS acquisition, the consensus EPRA EPS declined significantly. In this note, we argue that the market focus on the EPRA EPS comparison with UK peers ignores their continuous operational gains. Since 2019, Shurgard created huge fair value appreciation, even during the steep yield expansion periods. This indicates they create value, independent of cap rate moves. A lot of REITS lost 5-10% on their standing assets (FY22-23), while Shurgard added €880m in FV gains, >20% on FV. Partly thanks to COVID, but they even added to these gains afterwards. This value creation is largely lost in the EPRA EPS accounting (FV gains are not included). The LnS acquisition distorts this picture even further as EPRA EPS and NTA growth diverges. We cut our EPRA EPS estimates, but are confident that eventually investors will reward the total value creation. This process might take longer after LnS. Hence, our price target declines to 48.0 (54.0). We maintain our BUY rating.
Underlying
SHURGARD SELF STORAGE LIMITED
Provider
KBC Securities
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Wim Lewi
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