Self Storage : Interim report Q4 2022

Interim Report Q3 2022

Self Storage Group ASA

	Interim Report Q3 2022
Contents
Highlights	2
Key Figures	2
Financial development	3
Strategy	10
Corporate developments	13
Risks and uncertainty factors	14
Outlook	15
Financials	17
Alternative performance measures (APMs)	30

1

Interim Report Q3 2022

Highlights

Self Storage Group (SSG) continued the strong and positive operational development in the third quarter with solid organic revenue- and EBITDA-growth, and with revenue exceeding NOK 100 million for the frst time. SSG continues to develop new facilities and opened 2 100 m2 current lettable area (CLA) in the third quarter. Four new properties were acquired during the quarter, and organic growth in Sweden was initiated with the signed agreement to acquire a property in Trollhätten. Demand is strong and occupancy for mature facilities is above targeted levels.

There has been a yield expansion in the property market during the quarter driven by rising interest rates. As a consequence, the Group's independent appraiser has estimated a change to the fair value of the Group's freehold investment properties of NOK -121.4 million in the third quarter. This is a non-cash P&L charge and there are no other negative elements impacting the valuation of the portfolio. The Group's quarterly revenue has increased 10% since Q3 2021.

Following this change to the value of the portfolio, the Group's loan to value ratio stands at moderate 41% at the end of the quarter, providing the Group fnancial fexibility for further growth. SSG has favourable fnancial terms with 75% of total interest-bearing debt as of end September 2022 swapped to fxed rates. The increased fnancial expense in the third quarter is related to a currency depreciation of NOK compared to DKK resulting in NOK -6.7 million in fnance expense from unrealised loss in foreign currency. The company has a strong pipeline and a solid foundation for further proftable growth and expansion in the Nordics.

Q3 2022

• All time high revenues of NOK 101.9 million, up 10% from NOK 92.8 million in Q3 2021
• All time high EBITDA of NOK 60.5 million, up 4% from NOK 58.2 million in Q3 2021
• Adjusted proft before tax of NOK -87.7 million, compared to NOK 38.8 million in Q3 2021
• Average occupancy in Q3 2022 for sites with more than 12 months of operation above target with 90.4% (91.6%) and an average rent per m2 of NOK 2 356 per year (NOK 2 321)
• Acquisition of three properties in Norway and one property in Denmark in the quarter
• Opening of 2 100 m2 CLA in the quarter and following plan of opening 15 000+ m2 CLA during 2022

Key Figures1

	Q3	Q3	YTD	YTD	Full year
(Amounts in NOK million)	2022	2021	2022	2021	2021
Revenue	101.9	92.8	291.7	255.4	346.1
Lease expenses	- 4.0	- 4.2	- 11.6	- 9.4	- 13.3
Total other operating expenses	- 37.5	- 30.5	- 109.1	- 91.7	- 129.9
Total adjustments	-	-	-	3.4	3.4
Adjusted EBITDA	60.5	58.2	171.1	157.8	206.3
Adjusted EBIT	55.1	53.8	156.2	145.6	189.5
Change in fair value of freehold investment property	- 121.4	1.7	- 117.0	17.5	320.0
Change in fair value of leasehold investment property	- 12.3	- 12.2	- 37.1	- 34.3	- 46.4
Net fnance	- 9.1	- 4.4	- 2.2	- 15.0	- 19.1
Adjusted Proft before tax	- 87.7	38.8	- 0.1	114.0	444.0
Adjusted Net Proft	- 69.0	29.7	- 0.8	90.0	351.3
Current lettable area (in thousands m2)	182.6	165.3	182.6	165.3	171.8
Lettable area under development (in thousands m2)	39.2	39.8	39.2	39.8	34.9
Number of facilities	133	126	133	126	128
1Non-GAAP measures are defned on page 30

2

Interim Report Q3 2022

Financial development

Self Storage Group continues to experience strong demand for its services, and had all-time high revenue and EBITDA in the third quarter. Occupancy for facilities in operation more than 12 months has exceeded SSG's target level of 90% and was 90.4% in the third quarter of 2022. Current lettable area (CLA) at the end of September 2022 was 182 600 m2, of which 167 700 m2 had been in operation for more than 12 months. The CLA increased by 2 100 m2 during the third quarter and by 17 300 m2 during the last 12 months. Three properties in Norway and one in Denmark were acquired in the third quarter of 2022 and a total of eleven properties were acquired during the frst nine months of 2022, contributing to the development pipeline of 39 200 m2 CLA.

Due to the rapid growth in lettable area and SSG's expansion plans, flling up capacity has historically been prioritised over increasing prices, but with the steady high occupancy levels for the last 12 months, steps have been taken to increase prices. Prices were CPI adjusted in Q1 2022, and street-rates and the use of entry-ofers are constantly evaluated.

In the third quarter of 2022, there was a yield expansion in the property market, resulting in a change in fair value of NOK -121.4 million. The value of the freehold investment portfolio increased by NOK 56.1 million during the frst nine months of 2022 to a total of NOK 2 478 million. The increase from acquisitions and expansions amounts to NOK 161.6 million, the decrease from change in fair value YTD amounts to NOK -117.0 million and the increase from positive currency diferences amounts to NOK 11.5 million.

On 27 October 2022 it was fve years since SSG was listed on Oslo Stock Exchange. The Group has grown strongly since the IPO in 2017 and has delivered solid revenue and EBITDA-results each quarter. SSG has a leading position in the Norwegian market and is one of the leading self-storage providers in Scandinavia. With the growth of the Group, SSG has increased focus on IT, branding, planned maintenance and organisational development to level up the scalable platform for future growth.

Revenue

Revenue for Q3 2022 was NOK 101.9 million, an increase of NOK 9.1 million from Q3 2021.

Rental income from self-storage services was NOK 93.2 million in Q3 2022, an increase of NOK 7.3 million from Q3 2021. The increase is related to organic growth in lettable area through opening of new facilities and expansions and average rent. Increased self-storage revenue from the CSS-segment amounts to NOK 4.2 million while increased self-storage revenue from the OKM-segment amounts to NOK 3.1 million compared to Q3 2021. Income from rental of containers from both segments amounts to approximately 8.8% of the Group's self-storage revenue. Average occupancy in Q3 2022 for sites with more than 12 months of operating history was 90.4% (91.6%) with an average rent per m2 of NOK 2 356 per year (NOK 2 321).

Other revenue was NOK 8.8 million in Q8 2022, an increase of NOK 1.8 million compared with Q3 2021. Other revenue consists of revenue from distribution of insurance, ancillary services, rental income from segments other than self-storage and other income. The income from ofce tenants fuctuates due to contracts expiring and ofce-space being converted to self-storage.

3

Interim Report Q3 2022

The Danish and Swedish Krone had a currency depreciation against NOK during Q3 2022 compared to Q3 2021, and there is a negative foreign exchange efect attributable to the revenue in SEK and DKK of NOK 0.6 million when comparing Q3 2022 and Q3 2021.

Lease expenses

According to IFRS 16 long-term leasehold agreements are treated as fnancial leases. Lease expenses thus only consist of leasehold-contracts classifed as short-term. Lease expenses were NOK 4.0 million in Q3 2022, down from NOK 4.2 million in Q3 2021. Lease expenses are impacted if long-term contracts expire and are renegotiated to short-term contracts, if new short-term contracts are signed, or if short-term contracts are renegotiated to long-term contracts. Average remaining lease period for leased facilities in the CSS-segment, including options, is 7.3 years. For OK Minilager, which has a number of short revolving contracts, the average remaining term is 2.0 years.

At the end of September 2022, 56% of the current lettable area in SSG is held freehold, compared to 51% at the end of September 2021. 47% of current lettable area in the City Self-Storage segment is freehold, while 71% of current lettable area in OK Minilager is freehold. The share of freehold property is increasing in both segments.

Property-related expenses

Property-related expenses consist of maintenance, electricity, cleaning, security, insurance, property tax and other operating costs related to the facilities. Maintenance is recorded as operational cost and is not capitalised. The maintenance and upgrading of facilities has been at a higher level during the summer season.

Property-related expenses in Q3 2022 were NOK 15.8 million, an increase of NOK 5.7 million compared to Q3 2021. The increase is mainly related to the increased number of facilities and CLA in the portfolio and level of maintenance compared with one year earlier. Lettable area in SSG increased by 17 300 m2 (10%) since September 2021, and the number of facilities increased by 7 to 133 facilities as of the end of September 2022. In addition, costs to electricity and heating increased by NOK 0.9 million compared to Q3 2021 following extreme price-development in the power market during the last year. In the third quarter of 2022 power expenses constituted 17% of the total property-related expenses.

The Group is focused on energy management on all levels and is continuously focusing on reducing the energy consumption in the portfolio. SSG's buildings are equipped with few technical installations, and reducing the energy consumption is mainly done by keeping the temperature in climate-controlled environments at a low level, installing heat pumps and upgrading existing facilities to LED-lightning with movement sensors. LED-lightning uses less energy and has a long lifetime. All new facilities are equipped with LED-lightning.

4