Shurgard Model update after robust outlook FY23-25

Shurgard FY22 results continue on its growth track, with a stellar 8.6% lfl operating revenue growth. The EPRA Earnings of EUR 143.6m (+15% yoy) came slightly above our estimate at EUR 141.9m. The outlook for 2023 points to an 8.0% property revenue growth. The company believes it can raise yields for new projects from a 7-8% range to 8-9% range and to expand its operating margin by 0.2%. These figures confirm that growth momentum continues into FY23. Capex FY23 was guided to EUR 150m or 70k sqm (Dev.+Acq.).The UK market remained the strongest link over FY22 with an impressive 11.6% yoy growth as it continues to ramp up its average rent/sqm.
We update our model by adding some Capex, increase occupancy as the impact from new developments is lower than expected, but we also increased interest costs from 2.36% gradually to 2.80% by FY25. Our EPRA EPS23 expectation rises slightly from 1.70 to 1.72, EPS24 from 1.82 to 1.85 and EPS25 from 2.00 to 2.03. We maintain our target price at EUR 58 and rating at BUY.