UK self-storage operator Big Yellow Group (LON:BYG) posted a 2% increase in Q1 like-for-like revenue, continuing the trend FY25/26 trend. Like-for-like occupancy in the quarter to June dipped 0.2%, while average rent per square foot rose 3%.
Pipeline growth
Occupancy across the group’s 113 stores increased by 161,000 square feet or 2.4% of the maximum lettable area at 30 June. That compared with a 47,000 square foot or 0.5% increase at the same point last year.
While like-for-like occupancy dipped 0.2% to 79.2%, the average rate increased 3% to £36.68 per square foot. Group revenue for the quarter was up 3%, thanks to new openings.
The firm acquired a freehold site in Acton and now has 12 stores in its pipeline, with planning consent granted for nine. Work has started on six of these, which will add 356,000 square feet of new space or around 5% to the current total.
Building will be partly funded from the £38 million proceeds from the sale of a site in Harrow. On a proforma basis, the 12 pipeline stores will add around £35 million of net operating income.
The firm flagged a 4% increase in H1 operating costs due to spending on energy efficiency measures, automation and higher rates. However, H2 should see a smaller increase so it is budgeting for a 2% rise for the full year.
Self storage isn’t the most exciting business on the planet, but it’s a steady earner. Big Yellow rival Safestore (LON:SAFE) posted a similar 2.4% increase in LFL revenue across its 140 UK stores in the six months to end April.
The companies themselves say their business is driven by ‘life events’ – people getting divorced, moving house or dying. Given the moribund state of the housing market, growth is fairly pedestrian at the moment, but that can change.
Despite the success of the self-storage model, both companies seem under-researched, undervalued and unloved. Given the high level of interest in UK commercial real estate, both from industry insiders and private equity firms hungry for predictable cash flows, we wouldn’t be at all surprised if one or both received a bid.
Read the press release here: https://corporate.bigyellow.co.uk/investors
