Less Mess Storage Inc. operates a five-property self-storage portfolio in Central and Eastern Europe, with three facilities in Prague, and two in Warsaw, Poland. Apart from one long leasehold, the company owns all the real estate, which comprises of 185,000 square feet of rentable storage space.
Less Mess purchased its properties in April 2014 from the Selvaag Group, a private Norwegian company that developed the stores under the City Self-Storage brand name. The facilities are being rebranded as Less Mess Storage, with a new website.
Inside Self-Storage recently spoke with Guy Pinsent, president and CEO, about the company’s unique origins and status as a public corporation, as well as its plans for future growth.
Less Mess is based in Canada and listed on the TSX Venture Exchange. Tell us about the company’s origins.
Pete Smith, our chairman, is based in Vancouver. Last year, he created a publicly listed cash shell and was looking for a deal opportunity.
Pete and I go back a long way. As students at University of Cambridge in England, we were on the varsity blues boxing team together. Pete had subsequently visited me in Poland regularly over the past decade, so he knew about my interest in the self-storage potential there. When the opportunity arose to acquire the City Self-Storage assets in the Czech Republic and Poland last year, we teamed up to put the deal together and raise the capital through the publicly listed vehicle.
In effect, we acquired and floated the five-store portfolio simultaneously. Although an unusual, possibly unique structure, it makes sense on several levels. Being a public company on a stock exchange with exacting levels of disclosure and financial reporting confers several benefits, including increased comfort levels with our existing and potential debt financiers.
Also, as a public company, we have great flexibility in financing options for expansion. Self-storage is, of course, well-established and understood by investors in Canada, the second largest storage market in the world after the United States, with about 3.5 square feet per capita. However, the industry in Europe is still niche and not as widely understood by the investment community, so the cost of capital tends to be higher.
What’s the growth opportunity in the Czech Republic and Poland?
Self-storage only arrived in Europe—in London—in the early 1980s, and then grew rapidly across the continent over the past 30 years to just under 2,000 stores today. Together with our investors, we see a huge growth opportunity in the Czech Republic, Poland and neighboring markets.
With a little patience, self-storage has proven to work wherever it has been tried, where there are the right demographics and demand drivers in place. We see these in abundance in the Czech Republic and Poland, countries that have enjoyed strong growth over the last 20 years and emerged as modern, service-based and wealthy economies. Poland in particular, with a population of about 39 million, is the 20th biggest economy in the world. It even kept growing in 2009 when every other country in Europe and most of the world was in a recession.
Based on real purchasing power per capita, Prague and Warsaw are now the third and seventh wealthiest capital cities of the European Union. In addition, they show all the signs of prosperity and consumerism as you see in cities across North America: dense traffic with high-end cars (both countries even have Ferrari dealerships), gleaming, modern office skyscrapers, a Starbucks seemingly on every other corner, IKEA stores, and so on.
However, so far, there is almost no self-storage. The effective self-storage penetration rate right now in the Czech Republic and Poland is zero. If Warsaw were to reach the United Kingdom penetration rate of about 0.5 square feet per capita—itself way behind Canada and the United States—then the city would have 40 stores. Today, there are only three stores in Warsaw, two of which are owned by Less Mess.
How did you come up with the company name?
Four years ago, when I was looking at the self-storage opportunity, my friend and the creative director at the advertising company Ogilvy & Mather put his team on the case to come up with a name and logo. After considering literally dozens of names and hundreds of logos, we selected Less Mess and the beautiful logo design we have today.
The idea is to explain the offer as well as have something catchy and fun. Magda Paszewska, the graphic designer at Ogilvy who came up with the winning logo, has been retained by us for all design work for our rebranding, which is scheduled for completion at the end of October.
What are your plans over the next five years?
We plan to open as many new stores in the Czech Republic and Poland as possible. Also, if the right opportunity arises, we’ll make acquisitions in neighboring markets. Germany, for example, which shares its eastern border with Poland, has seen enormous growth in the self-storage sector in the past decade; and Berlin, just a five-hour drive from Warsaw and home to about 50 stores, may provide acquisition opportunities. Over time, we would like to become the “Public Storage” of the region.
