Store Performance
We had a very strong quarter to June with good net move-in growth. The second quarter peaked in August and then we saw many of our students and short term house moves starting to vacate in September, leading to a relatively flat quarter.
The third quarter saw student and house move vacations leading to a net loss in units occupied and sq ft. In the final quarter we have seen a return to growth in net occupied rooms and increased occupancy in the stores by 82,000 sq ft. The table below illustrates the move-in performance in the year.
| Store move-ins | Year ended 31 March 2015 |
Year ended 31 March 2014 |
% | Net move-ins 31 March 2015 |
|---|---|---|---|---|
| April to June | 20,196 | 18,685 | 8 | 5,613 |
| July to September | 21,873 | 19,946 | 10 | (704) |
| October to December | 16,897 | 14,848 | 14 | (1,410) |
| January to March | 16,131 | 15,464 | 4 | 1,126 |
| Total | 75,097 | 68,943 | 9 | 4,625 |
In all Big Yellow stores, the occupancy growth in the current year was 346,000 sq ft, against an increase of 200,000 sq ft in the prior year. This growth includes 24,000 sq ft of occupancy acquired with the acquisition of Fort Box Self Storage in Oxford (“Oxford 2”), and 55,000 sq ft of occupancy acquired with the acquisition of Big Storage Chester. The net occupancy growth in the year was therefore 267,000 sq ft. This growth represents an average of 3,870 sq ft per store (2014: 3,030 sq ft per store).
| Store occupancy summary | Occupancy 31 March 2015 000 sq ft |
Occupancy 31 March 2014 000 sq ft |
Growth for year to 31 March 2015 000 sq ft |
Growth for year to 31 March 2014 000 sq ft |
|---|---|---|---|---|
| 50 mature stores | 2,350 | 2,146 | 204 | 109 |
| 14 established stores | 613 | 536 | 77 | 51 |
| 5 developing stores | 215 | 150 | 65 | 40 |
| Total – all 69 stores | 3,178 | 2,832 | 346 | 200 |
The 50 mature stores are 75.3% occupied compared to 71.1% at the same time last year. The 14 established stores have grown in occupancy from 60.7% to 69.4%. The five developing stores added 65,000 sq ft of occupancy in the year to reach closing occupancy of 63.2%. Overall store occupancy has increased in the year from 67.9% to 73.2%.
All 69 stores open at the year end are trading profitably at the EBITDA level.
Pricing and rental yield
We have continued our sales promotion offer throughout the year of “50% off for up to your first 8 weeks storage”. Our Price Promise is also used to match competitors’ prices, if the product is comparable. Pricing is dynamically generated and takes into account customer demand and local competition.
In the year ended 31 March 2015, net rent in the like for like stores grew by 2.4%. This has been a combination of reducing discounts to new customers and retaining price increases from existing customers.
As the stores lease-up, our pricing model reduces the level of promotional discounts offered in individual stores. This squeezing out of promotions leads to an increase in net achieved rents. The table below illustrates this, showing the growth in net rent per sq ft for the portfolio over the year.
| Average occupancy in the year | Net rent per sq ft growth over the year |
|---|---|
| 0 to 60% | 1.1% |
| 60 to 70% | 1.4% |
| 70 to 80% | 2.0% |
| Above 80% | 5.9% |
The table below shows the average key metrics across the store portfolio for the year ended 31 March 2015:
| Mature stores | Established stores | Developing stores | |
|---|---|---|---|
| Store capacity | 62,420 | 63,071 | 68,000 |
| Sq ft occupied per store at 31 March 2015 | 47,000 | 43,786 | 43,000 |
| % occupancy | 75.3% | 69.4% | 63.2% |
| Revenue per store | £1,374,000 | £1,138,000 | £1,115,000 |
| EBITDA per store | £923,000 | £740,000 | £678,000 |
| EBITDA margin | 67.2% | 65.0% | 60.8% |
Armadillo
In April 2014 we acquired the Armadillo portfolio of 10 stores, which we have been managing since 2009, with an Australian consortium. The Armadillo platform was added to in February 2015 with the acquisition of a further four stores following the purchase of Big Storage by the Group and its subsequent disposal to a company in which the Group has a 20% interest, with the balance held by an Australian consortium.
The Armadillo stores are lower-frills, but good quality, largely freehold assets in towns where we would not typically locate a Big Yellow store. Armadillo provides a number of operational advantages to the Group, such as a wider platform to sell to national accounts, more promotional opportunities for staff, more efficient use of the Company’s overhead and benefits online. The Group will consider other opportunities to add to the Armadillo platform if the right stores or portfolio become available.
Development pipeline
There are two freehold sites with planning for Big Yellow stores to be developed. We also own a 4.5 acre development site in central Manchester where we are in planning discussions for a mixed use scheme incorporating a new Big Yellow store.
We have acquired the freehold interest of our existing 34,000 sq ft store in Battersea, which had 12 years remaining on the occupational lease together with a 14,100 sq ft retail unit let to Halfords on an annual rent of £458,000 with 7 years unexpired, part of which is sublet to Pets at Home. The next rent review date is January 2017. The total consideration paid was £23 million. This increases the freehold ownership of our portfolio and protects our position in this important central London location. In the medium term, we will redevelop the 1.5 acre site to include a larger Big Yellow store together with other uses.
The Group also owns an office building adjacent to our Wandsworth store which we are seeking planning permission to convert to self storage, adding approximately 30,000 sq ft of net storage space to the store.
The status of the development pipeline is summarised in the table below:
| City | Location | Status | Anticipated capacity | |||
|---|---|---|---|---|---|---|
| Battersea | Potential redevelopment of Big Yellow store and adjoining retail in a mixed use residential scheme to increase our self storage capacity | Early design discussions with the Borough Council | Up to an additional 60,000 sq ft | |||
| Cambridge | Adjacent to the Cambridge Retail Park, Newmarket Road | Existing B8 consent, detailed signage consent required | 55,000 sq ft | |||
| Guildford | Prime location in centre of Guildford on Woodbridge Meadows | Consent granted | 56,000 sq ft | |||
| Manchester | Prime location on Water Street in central Manchester | Planning under negotiation | 50,000 sq ft to 70,000 sq ft | |||
| Wandsworth | Possible extension of 30,000 sq ft to existing 47,000 store | Planning under negotiation | Additional 30,000 sq ft |
The Group manages the construction and fit-out of its stores in-house, as we believe it provides both better control and quality, and we have an excellent record of building stores on time and within budget.