Demand drives revenue, profits higher for Big Yellow

(Sharecast News) - Self-storage provider Big Yellow reported a 4.6% increase in revenue in its final results on Tuesday, to £135.2m, which it said was largely driven by an increase in average occupancy.
The FTSE 250 company said its store revenue for the fourth quarter totalled £33.8m, an increase of 9.7% over the same quarter in the prior year.

Average net achieved rent per square foot was up 1.1% year-on-year for the 12 months ended 31 March at £28.16m, while like-for-like closing store occupancy was 87.4%, up from 80.7% at the end of the prior year.

Cash flow from operating activities increased by 4.2% to £76.7m, while adjusted profit before tax was 5.1% firmer at £74.6m and adjusted earnings per share ahead 0.7% at 42.4p.

The board confirmed a 0.6% increase in the total dividend to 34p per share.

Its statutory profit before tax was 185% higher than the prior year at £265.8m, which the board said was due to a higher revaluation gain on investment properties.

Big Yellow opened three new stores in the year at Camberwell and Battersea in London, and at Bracknell in Berkshire.

The board noted its placing of 8.3 million shares in April 2020, raising £79.9m net of expenses to grow its development pipeline.

That led to the acquisition of four new development sites in Wapping, Staines, Epsom, and Kentish Town, with a total estimated self storage development cost of £106m.

Big Yellow said those acquisitions took its pipeline to 14 sites, totalling approximately one million square feet, or 20% of its current maximum lettable area.

Planning consent was secured on five proposed stores in the year, with a total of eight stores now with planning consent.

"This has been a very challenging year for everyone with the combined effects of a health and an economic crisis," said executive chairman Nicholas Vetch.

"Throughout the year, we made significant investment to make our workplaces safe and Covid-secure for our employees, customers, and suppliers.

"We have also increased our focus on wellbeing to heighten our responsiveness during what has been a very stressful time."

Vetch said the board could "have no complaint" over the company's performance over the last year, but said risks did remain, and thus the firm remained cautious.

"There are, however, reasonable grounds to have confidence in our business model having navigated two external crises of considerable proportion since the global financial crisis.

"This pandemic has accelerated many structural changes that were already occurring, such as the move to online retailing and an increase in working from home facilitated by technological advances.

"These developments, combined with the shortage of quality flexible mini-warehousing space, from which to operate small scale storage and e-fulfilment is helping to drive our demand."

Big Yellow believed those were long-term trends, Nicholas Vetch said.

"The structural need for self storage is now firmly embedded and so, put simply, we are building more of it focussed on our core areas of London, its commuter towns, and major cities where the barriers to new supply remain high.

"This increase in capacity, combined with the cash flow growth we can derive from our existing portfolio, given its increased pricing power, will drive performance over the next few years."

The stores were approaching the company's target of 90% occupancy, and the firm had 14 sites in development, representing 20% growth to existing capacity, while Vetch noted it had interest cover of 10x.

"Our investment case remains to provide consistent compounding returns from both income and growth from a secure capital structure."

At 0946 BST, shares in Big Yellow Group were down 0.08% at 1,313p.