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Big Yellow occupancy and pricing stand firm

The self-storage specialist has managed to grow occupancy levels since April
Big Yellow occupancy and pricing stand firm

In some respects, it is not hard to see why the market has attached such a large premium to Big Yellow's (BYG) shares. The onset of lockdown measures may have marginally reduced closing occupancy levels but a 2.7 per cent increase in the average net rent charged per square foot (sq ft) boosted revenue during the year to March. Occupancy had risen to 82 per cent by the start of June and the average net rent per sq ft since April was also 1.4 per cent higher. 

IC TIP: Hold at 1045p

However, a potential downturn in housing transactions could drag on occupancy levels this year, indicated by the reduction in demand from short-stay domestic customers as the market was frozen at the end of March. Nevertheless the group is pressing ahead with developments, after acquiring four sites last year, taking the total pipeline to 13 stores. That has a cost to complete of £159m, taking into account the £64m already deployed this year. An April share placing boosted available liquidity to £162m and the self-storage group posted an operating cash conversion rate of 92 per cent last year. 

Panmure Gordon forecasts adjusted NAV of 814p at the end of March 2021, rising to 852p the same time the following year. 

BIG YELLOW GROUP (BYG)   
ORD PRICE:1,045pMARKET VALUE:£ 1.83bn
TOUCH:1,043-1,048p12-MONTH HIGH:1,245pLOW: 630p
DIVIDEND YIELD:3.2%DEVELOPMENT STOCK:£136m
PREMIUM TO NAV:49%  
INVESTMENT PROP:£1.39bnNET DEBT:31%*
Year to 31 MarNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201653110571.924.9
201756811263.627.6
201862313485.030.8
201968912778.333.2
202070193.455.833.8
% change+2-26-29+2
Ex-div: 18 Jun   
Payment: 10 Aug   
*Includes lease liabilities of £17.2m