Big Yellow Group LON:BYG, the Bagshot-based, FTSE250 self-storage group is due to publish its half-year results on Monday (20th November).
As previously reported, the company is structured as a REIT (Real Estate Investment Trust), but the product it sells is storage space from its ubiquitous, aluminium warehouse-sized sheds that can be found up and down the country, normally off ring roads.
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The REIT owns and operates the existing storage units, and the vehicle is used to finance new developments. Big Yellow currently operates 108 self-storage units with almost one million square feet of new facilities in the pipeline.
Last month the company raised around GBP110m in a placing to finance the new developments. Around GBP108m came from institutional investors, whilst the company’s directors threw just shy of GBP3m into the hat and the company hopes to use the money to build new units in Slough, Wapping, Wembley, Queensbury, and Staines.
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Big Yellow, as reported, had downed tools on new construction in May 2022, citing unfavourable conditions in the construction market. However, post-placement, management said that conditions had “considerably improved.”
New facility performing strongly
The storage company cut the ribbon on its new facility in Kings Cross in June, a 103,000-square-foot development and the space is, said the company in a statement, already performing strongly. Big Yellow also acquired a site in Leicester, taking its slated stores to 11 having gained planning permission for six of these. However, to develop these stores, it will need to spend GBP147m.
It has had to fall back on the debt markets to help finance its growth – not the greatest time to be borrowing money. At the beginning of the year Big Yellow increased its revolving credit facility from GBP30m to GBP270m, increasing its debt exposure to GBP548m with net debt at the end of June of GBP484m. The company can draw-down an additional USD225m of approved unutilised fixed sterling notes with a tenor of between seven and 15-years from Pricoa Private Capital.
Big Yellow revenue growth
The company keeps ticking-over. In its last financial update for the quarter ending June, Big Yellow announced revenues of GBP48.1m, up 6.7% year-on-year. As to whether the company is making money, more will be revealed next week. In the year up to 31st March the company made GBP75.3m pre-tax profit from GBP189m of revenues. This was down somewhat, as its property assets were revalued, but Big Yellow has consistently been increasing its margins, expanding its portfolio and charging higher rents to its customers, whilst still maintaining high demand. It seems the British public still has too much ‘clutter’ and ‘stuff’.
Dividend streams
As reported, Big Yellow has consistently paid its shareholders a valuable stream of dividends. Big Yellow’s dividend policy is to distribute 80% of full year adjusted earnings per share. Listed in 2000, a year after the company was formed, Big Yellow was originally an AIM company, but made the move to the FTSE250 in June 2006 and has seen its share price increase 160% since then.This year the stock has not done as well, starting the year at GBP11.84 and falling by GBP1, or 8.4% by the close of play on 14th November. Over one-year the stock has fallen by -7.9%. The company’s shares have ranged between 901p and 1,307p over a 52-week period and Big Yellow has a market cap of GBP2bn.
Big Yellow is going to remain an out-of-town fixture for some time, although not the cheapest stock, the last year’s performance has opened the space to get in at a somewhat discounted price.
