Fundraise of over £6.6 million completed in March 2018
Following a successful fundraise of £6.6 million, the investee companies have been in the acquisition and establishment phase for two larger managed storage sites.
Storage (Pennines) Ltd
The Company has purchased a site in Old Trafford, Manchester. Planning permission was issued in draft by the planning officer for a 40,000 sq. ft. facility, however subsequent revisions delayed ratification and resulted in a request to present to the planning committee due to an objection being raised by a local Councillor. The planning committee chose to decline the proposal as submitted, against the planning departments recommendation.
Specialist legal advice has been obtained which has confirmed there are very strong grounds for appeal, with the opinion expressed that the grounds on which the original submission was rejected are flawed. An appeal is currently being lodged. Ordinarily the appeal process should take approximately 18 weeks, however the COVID 19 crisis could well delay this, meantime any development is clearly on hold.
Storage (Cheshire) Ltd
The company opened its 42,000 sq. ft. facility in Bury in September 2019. Up until the Government’s restrictions following the Coronavirus outbreak, trading was ahead of plan and subsequently trading has held up.
It should be noted that managed storage is classed as an essential service due to its position in the supply chain hence can continue to trade. However, and in line with the Government’s guidance, the store is now operating reduced opening hours with skeleton staffing, taking the necessary precautions to protect both staff and visiting customers. Calls are being dealt with remotely by staff working from home. The payment receipts at the end of March were good with minimal defaults, however it is still early and going forward default rates may rise. To preserve cash, capital expenditure on further fit-out will be reduced until the market returns to growth, however, this has proven to be a resilient business model in previous times of recession.
In our September 2019 update, we advised that the Surestore team had sold three sites (belonging to three of companies involved in our first two Managed Storage EIS Funds) to an institutional buyer. As the sale of the sites progressed, it became apparent that the larger sites were commanding a higher price per square foot when sold. Whilst never a guarantee, this bodes well for the sites that comprise our Managed Storage EIS Fund No. 3.
There will be some inevitable delays and costs incurred following the Coronavirus outbreak. However, this has proven to be a resilient business model in previous times of recession.
Please see www.surestore.co.uk for further information.