Store Performance
We had a strong quarter to June with good net move-in growth. The second quarter peaked in August and then many of our students and short term house moves vacate in September and October, leading to a net loss in occupied rooms and sq ft occupancy.
In the final quarter we have seen a return to growth in net occupied rooms and increased occupancy in the stores by 123,000 sq ft. The table below illustrates the move-in performance in the year. Given the weaker economic backdrop to deliver broadly the same number of move-ins was a satisfactory performance.
| Store move-ins | Total move-ins Year ended 31 March 2016 |
Total move-ins Year ended 31 March 2015 |
% | Net move-ins Year ended 31 March 2016 |
Net sq ft Year ended 31 March 2016 |
|---|---|---|---|---|---|
| April to June | 20,112 | 20,196 | 0% | 4,460 | 146,000 |
| July to September | 21,763 | 21,873 | (1%) | (1,183) | 54,000 |
| October to December | 16,643 | 16,897 | (2%) | (1,998) | (138,000) |
| January to March | 16,920 | 16,131 | 5% | 1,420 | 123,000 |
| Total | 75,438 | 75,097 | 0% | 2,699 | 185,000 |
In all Big Yellow stores, the occupancy growth in the current year was 185,000 sq ft, against an increase of 267,000 sq ft in the prior year (the prior year figure excludes 79,000 sq ft of occupancy acquired with the acquisitions of Chester and Oxford 2). This growth represents an average of 2,606 sq ft per store (2015: 3,870 sq ft per store).
The prior year increase included a one-off short term national account move-in of 25,000 sq ft who vacated in April 2015. Adjusting this out of both years would show current year occupancy growth of 210,000 sq ft compared to 242,000 sq ft in the prior year.
| Store occupancy summary | Occupancy 31 March 2016 000 sq ft |
Occupancy 31 March 2015 000 sq ft |
Growth for year to 31 March 2016 000 sq ft |
Growth for year to 31 March 2015 000 sq ft |
|---|---|---|---|---|
| 56 mature stores | 2,689 | 2,589 | 100 | 141 |
| 11 established stores | 538 | 503 | 35 | 84 |
| 4 developing stores | 136 | 86 | 50 | 42 |
| Total – all 71 stores | 3,363 | 3,178 | 185 | 267 |
The 56 mature stores are 76.9% occupied compared to 74.1% at the same time last year. The 11 established stores have grown in occupancy from 71.4% to 76.4%. The four developing stores added 50,000 sq ft of occupancy in the year to reach closing occupancy of 51.3%. Overall store occupancy has increased in the year from 73.2% to 75.3%. On a like-for-like basis, closing occupancy was 76.7%, an increase of 3.5 percentage points.
70 of the stores open at the year end are trading profitably at the EBITDA level, with Cambridge the exception, having opened in January 2016, and expected to break even in summer 2016.
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 2016, the average growth in the net achieved rent per sq ft was 2.5% compared to 2.6% in the prior year. We remain focussed on occupancy and the outcome on portfolio average rental growth is merely a by-product of the yield management at each store.
As our portfolio is now at a higher level of occupancy, our pricing model is increasingly reducing promotions and is raising asking prices where individual units are in scarce supply. This lowering of promotions, coupled with price increases to existing and new customers, 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 period (the table below excludes Enfield and Cambridge which opened in
the year).
| Average occupancy in the year | Number of stores |
Net rent per sq ft growth over the year |
|---|---|---|
| 0 to 60% | 4 | (1.9%) |
| 60 to 70% | 13 | 1.6% |
| 70 to 80% | 28 | 2.3% |
| Above 80% | 24 | 4.1% |
The table below shows the average key metrics across the store portfolio for the year ended 31 March 2016:
| Mature stores | Established stores | Developing stores | |
|---|---|---|---|
| Store capacity | 62,400 | 64,000 | 66,250 |
| Sq ft occupied per store at 31 March 2016 | 48,000 | 48,900 | 34,000 |
| % occupancy | 76.9% | 76.4% | 51.3% |
| Revenue per store (£000) | 1,484 | 1,229 | 796 |
| EBITDA per store (£000) | 1,018 | 833 | 414 |
| EBITDA margin | 68.6% | 67.8% | 51.9% |
Armadillo Self Storage
In April 2014 we acquired the portfolio of 10 Armadillo stores, which we have been managing since 2009, with an Australian consortium. The Armadillo platform was grown 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.
In April 2016 we acquired a further two stores into the Armadillo platform in Canterbury and West Molesey, for £6.4 million. This takes the Armadillo platform to 16 stores and 745,000 sq ft of MLA.
Armadillo is a lower-frills brand, with largely freehold conversions of existing buildings, with a minimum capacity of 30,000 sq ft, in towns where we would not typically locate a Big Yellow. Armadillo provides a number of operational advantages to the Group, such as a wider platform to sell to national accounts, more opportunities for staff promotion, and more efficient use of the Company’s marketing and central overhead costs. The Group will consider other opportunities to add to the Armadillo platform if the right stores or portfolios
become available.
Development pipeline
We have planning consent to construct a new store in central Guildford, which we anticipate opening in Autumn 2017. We own a further six development sites for which planning is to be negotiated, including two existing stores where planning is being sought to extend and redevelop.
We recently surrendered our 125 year lease in Manchester to the City Council for £8 million and took a new 250 year lease on a site of 0.8 acres for which planning for a self storage centre will be sought. We also have an option to re-acquire an additional 0.7 acres if our planning application is unsuccessful.
Included within our development programme are London sites at Kings Cross and Camberwell, acquired during the year. Kings Cross is a one acre site on which we 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 we intend to develop a new build store of 65,000 to 70,000 sq ft, subject to planning.
In December 2014 we 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 6 years unexpired, part of which is sublet to Pets at Home. This increased the freehold ownership of our portfolio and protected 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 status of the Group’s development pipeline is summarised in the table below:
| Site | Location | Status | Anticipated capacity | |||
|---|---|---|---|---|---|---|
| Guildford | Prime location in centre of Guildford on Woodbridge Meadows | Minor amendments to existing planning consent being sought. Store due to open in Autumn 2017, cost to complete of £5.5 million | 56,000 sq ft | |||
| Wandsworth, London | Possible extension of 27,000 sq ft to existing 47,000 sq ft store | Planning under negotiation | Additional 27,000 sq ft |
|||
| Camberwell, London | Located in prominent location on Southampton Way | Site recently acquired, planning application to be prepared | 65,000 to 70,000 sq ft |
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| Kings Cross, London | Prominent location on York Way | Site recently acquired, planning application to be prepared | In excess of 90,000 sq ft |
|||
| Battersea, London | Prominent location on junction of Lombard Road and York Road (South Circular) | 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 50,000 sq ft | |||
| Newcastle | Prime location on Scotswood Road | Negotiations ongoing with existing long leasehold tenant to obtain vacant possession | 50,000 sq ft to 60,000 sq ft |
|||
| Manchester | Prime location on Water Street in central Manchester | Planning under negotiation | 60,000 sq ft |
The Group acquired trading stores from Lock and Leave at Nine Elms and Twickenham in April 2016 for £14.6 million. Beyond this acquisition, there is currently no committed capital expenditure for the next financial year, although the Group intends to start the construction of Guildford in the second half of the year.
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.