Over the year to the end of March 2016, Big Yellow’s EPRA NAV rose by 11.5% to 569.1p. Its adjusted diluted EPRA earnings per share were up 15% to 31.1p and from this they are paying dividends totalling 24.9p for the year, an increase of 15%.
The increase in profits was driven in part by higher occupancy – 76.7% vs. 73.2% (they are targeting 85% to be achieved within a few years) and a 3% increase in the average achieved net rent to £25.73 per square foot. In addition the company had the benefit of stores acquired or opened during the year.
They opened a 60,000 sq ft store in Enfield in April 2015, on a prominent location on the A10 and a 60,000 sq ft store in central Cambridge opened in January 2016. They intend to commence construction of our store in central Guildford in the second half of the year, and anticipate it opening in Autumn 2017. Big Yellow have acquired two prime sites at Kings Cross and Camberwell. Kings Cross is a one acre site on which they intend to develop a new build store of in excess of 90,000 sq ft, subject to planning. Camberwell is in Zone 2 to the south of London Bridge, and they intend to develop a new build store of 65,000 to 70,000 sq ft, subject to planning. There is interim rental income on these two sites while they pursue planning, which will mitigate the increase in their variable rate interest expense. These sites, together with Guildford Central, extensions at the existing Battersea and Wandsworth stores, and development sites in Newcastle and Manchester (the last four all subject to planning) will provide in excess of an additional 400,000 sq ft of capacity.
Big Yellow now operates from a platform of 89 stores, including 16 stores branded as Armadillo Self Storage, in which the Group has a 20% interest. We own a further seven Big Yellow self storage development sites (including two extensions sites), of which two have planning consent. The current maximum lettable area of this platform is 5.3 million sq ft. When fully built out the portfolio will provide approximately 5.7 million sq ft of flexible storage space. Of the Big Yellow stores and sites, 96% by value are held freehold and long leasehold; with the remaining 4% short leasehold.
The Group has net bank debt of GBP295.0 million at 31 March 2016 (2015: GBP277.1 million). This represents approximately 26% (2015: 27%) of the Group’s gross property assets totalling GBP1,126.2 million (2015: GBP1,022.8 million) and 33% (2015: 35%) of the adjusted net assets of GBP899.0 million (2015: GBP801.4 million). The Group’s interest cover for the year, expressed as the ratio of cash generated from operations against interest paid (per the cash flow statement) was 6.2 times (2015: 5.4 times).
During the year they successfully re-geared their existing 125 year, long leasehold interest on a proposed self storage site at Water Street, Manchester to 250 years, and in addition sold the surplus industrial land to Manchester City Council for GBP8 million. At 31 March 2016, the future cost of the current pipeline of seven development sites and extensions, six of which are subject to planning, is provisionally estimated to be approximately GBP55 million. This excludes any net proceeds that may be received on the redevelopment of our Battersea store and adjoining retail units into a mixed use scheme of residential, retail and self storage.
In April 2016, Big Yellow acquired the Lock and Leave portfolio. Big Yellow acquired two stores in London, at Nine Elms (65,000 sq ft MLA freehold) and Twickenham (25,000 sq ft MLA, 19 years unexpired leasehold), for GBP13.5 million and GBP1.1 million respectively, totalling GBP14.6 million. The Nine Elms store is approximately 85% occupied and sits neatly between our strong performing Kennington and Battersea stores, and their aim will be to drive revenue and cash flow through yield management. The Twickenham store is adjacent to our existing freehold 73,000 sq ft highly occupied store. The freehold stores in Canterbury (37,000 sq ft MLA) and West Molesey (35,000 sq ft MLA) were acquired by Armadillo for GBP6.4 million, and again they expect to drive operational performance under our management.
BYG : Big Yellow targeting 85% occupancy