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Investing.com -- Goldman Sachs has initiated coverage on Shurgard (EBR:SHUR) with a “buy” rating and a 12-month price target of €42.30, indicating a 17% upside from its €36.15 close as of July 3.
The initiation positions Shurgard ahead of the brokerage’s broader European real estate coverage, which averages around 5% upside potential.
Shurgard is the largest listed self-storage operator in Europe, managing 335 stores (318 self-managed) across seven countries with 1.7 million sqm of net rentable space and serving more than 220,000 customers.
Its €6.25 billion standing portfolio is primarily spread across the U.K. (30% of gross asset value), Benelux (23%), France (19%), Germany (14%), and the Nordics (14%).
Goldman highlights the company’s differentiated operating platform, underpinned by store clusterisation and technology-driven management, as a driver of operational efficiency.
Around 55% of stores are clustered, allowing staffing reductions and churn control through dynamic app-based pricing.
The company achieved an 85.2% occupancy rate at FY24, with same-store occupancy at 89.8%. Average rent stood at €276.1/sqm/year, growing at a 5% CAGR since 2019.
Financial projections suggest strong performance. Goldman forecasts a 2024–27 compound annual growth rate (CAGR) of 4.9% in EPS, compared to 3.2% and 3.3% for Safestore and Big Yellow (OTC:YELLQ), respectively.
EPS is projected to rise from €1.71 in 2024 to €2.35 by 2029. Net rental income is expected to grow at a 9% CAGR over the same period, supported by a €225 million annual investment in pipeline and M&A activity.
Shurgard targets 25% portfolio growth and 50% adjusted EPRA earnings growth by 2029, with yields of 8–9% at maturity.
Of the projected rental income growth, Goldman estimates 44% will come from like-for-like increases, 33% from acquisitions, and 23% from new developments.
Recurring EBITDA margins are forecast to improve from 59.4% in 2025 to 59.9% by 2029.
Balance sheet strength underpins the growth strategy. The company reported a loan-to-value ratio of 23.3% at end-2024, and maintains a BBB+ S&P credit rating.
Cost of debt was 3.27% in Q1 2025 and is expected to rise modestly to 3.41% by 2029, with most debt fixed and a 7.8-year average maturity. Net debt to EBITDA stood at 6x, and interest coverage at 8x.
Despite trading at a 30% discount to its FY26 estimated net tangible assets per share (€52.86), Shurgard continues to pay a consistent dividend of €1.17, with a 79% investor take-up on its scrip option.
Goldman views this valuation as attractive, citing M&A upside and tech-driven margin gains as key catalysts for re-rating.