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Occupancy boost for Big Yellow

Rental growth is slowing, but occupancy levels are rising
May 23, 2017

Back in November 2016, Big Yellow (BYG) warned it would come as little surprise if activity levels in the self-storage sector were more subdued over the next couple of years. And while average growth in the net achieved rent per square foot slowed from 2.5 per cent to 1.7 per cent in the year to March 2017, this was still a creditable achievement, with some of the slowdown attributable to sales promotions.

IC TIP: Hold at 800p

These helped boost occupancy levels from 75.3 per cent to 78.1 per cent and, after adjusting for a lower valuation uplift on the portfolio, profits rose by 11 per cent to £54.6m. Consequently, adjusted net asset value per share rose from 569p to 608p.

Trading in the past few months has been better than expected, and occupancy levels are forecast to break through the 80 per cent level this summer, closing in on the target of 85 per cent. Acquisitions included the four-store Lock and Leave portfolio for £21m. Armadillo, a chain of 19 branded stores in which Big Yellow has a 20 per cent stake, also made three acquisitions for £4.75m, while post year-end Big Yellow acquired a London site on the Highway in Wapping for future development.

Analysts at Peel Hunt are forecasting adjusted net asset value at March 2018 of 606p.

BIG YELLOW (BYG)
ORD PRICE:800pMARKET VALUE:£1.26bn
TOUCH:800-801p12M HIGH894pLOW: 630p
DIVIDEND YIELD:3.5%DEVELOPMENT STOCK:£36.1m
PREMIUM TO NAV:41%
INVEST PROPERTIES:£1.15bn*NET DEBT:33%

Year to 31 MarNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201339631.924.411
201442459.842.516.4
2015484105.072.521.7
2016531112.271.924.9
201756899.863.627.6
% change+7-11-12+11

Ex-div: 22 Jun

Payment: 27 Jul

*Includes joint ventures