Storage giant Big Yellow bumps up rents to offset higher interest rates
Self storage firm Big Yellow has reported an increase in revenue in the third quarter as it bumped it saw a pick-up in its reservations book.
The FTSE 250 firm’s revenue, most of which comes from London and the South East, jumped five per cent year-on-year. Like-for-like store revenue rose four per cent.
Chief executive Jim Gibson said in November that the UK’s transition to a higher interest rate environment had been challenging but the business had largely absorbed the change.
In a trading update, it said the third quarter was “seasonally weaker,” with occupancy across all of its 109 storage sites falling by 249,000 square feet, 3.9 per cent of its maximum lettable area as of 31 December 2023.
In the same quarter of 2022, the firm lost 240,000 square feet of occupancy.
Closing occupancy across all sites fell 2.8 per cent to 77.6 per cent, which the firm said reflected additional capacity from five new “stores.”
Average net rent per square foot rose seven per cent to £34.
As of 31 December 2023, the firm’s net debt was £372m.
“The occupancy performance in the third quarter has been similar to last year, and although it is too early in the quarter to judge whether it is sustainable, we have seen a pick-up in our book of reservations,” Gibson said on Thursday.
“We are gearing up to commence construction on all the sites on which we have planning consent, and where vacant possession is available, which we expect will add significantly to earnings over the next few years. The refinancing of the revolving credit facility, and with net debt to earnings before interest, tax, separation and amortisation (EBITDA) of approximately three times, means we can execute this expansion without taking undue risk.”
The firm announced in December that it had agreed £300m ESG-linked facility with Lloyds Bank, HSBC, Bank of Ireland and Barclays for an initial term of three years.