Store Performance
Prospects for the year were broadly in line with last year, but we converted a higher proportion of those prospects into customers, with move-ins up 3% on the prior year. This reflects the occupancy focus over the period, with continued innovation and investment in our digital platform and operations.
The table below shows the quarterly move-in and move-out activity over the year.
| Store move-ins | Total move-ins Year ended 31 March 2018 | Total move-ins Year ended 31 March 2017 | % | Total move-outs Year ended 31 March 2018 | Total move-outs Year ended 31 March 2017 | % |
|---|---|---|---|---|---|---|
| April to June | 20,332 | 19,509 | 4 | 15,112 | 15,625 | (3) |
| July to September | 21,463 | 20,702 | 4 | 22,952 | 22,239 | 3 |
| October to December | 16,000 | 15,409 | 4 | 18,190 | 17,679 | 3 |
| January to March | 16,133 | 16,095 | – | 15,273 | 14,468 | 6 |
| Total | 73,928 | 71,715 | 3 | 71,527 | 70,011 | 2 |
In the quarter to June, we saw a solid increase in move-in activity of 4%. Move-outs were down year on year, following lower activity levels in the second half of the year ended 31 March 2017. Move-ins continued to outperform year-on-year in the second and third quarters, although move-outs also increased following the earlier improvement in move-in activity, with a high volume of student move-outs in September and October. In the fourth quarter, move-in activity was impacted by the poor weather coupled with an early Easter delaying some activity into April.
In all Big Yellow stores, the occupancy growth in the current year was 179,000 sq ft, against an increase of 112,000 sq ft in the prior year.
| Quarterly net occupancy movement | Net sq ft Year ended 31 March 2018 |
Net sq ft Year ended 31 March 2017 | Net move-ins Year ended 31 March 2018 |
Net move-ins Year ended 31 March 2017 |
|---|---|---|---|---|
| April to June | 183,000 | 110,000 | 5,220 | 3,884 |
| July to September | 82,000 | 24,000 | (1,489) | (1,537) |
| October to December | (170,000) | (137,000) | (2,190) | (2,350) |
| January to March | 84,000 | 115,000 | 860 | 1,547 |
| Total | 179,000 | 112,000 | 2,401 | 1,544 |
We had a strong quarter to June with an increase in occupancy of 183,000 sq ft, significantly up on the prior year, which had been affected by uncertainty in the run-up to the Brexit referendum. The second quarter peaked in August and then many of our students and short term house movers vacated in September and October, leading to a net loss in occupied rooms and sq ft occupancy. The third quarter showed a higher loss in occupancy than the prior year due to the strong summer’s trading which led to an increase in move-out numbers. In the final quarter we have seen a return to growth in net occupied rooms and increased occupancy in the stores by 84,000 sq ft, which was slightly softer than the prior year for the reasons explained above.
The 67 mature stores are 82.2% occupied compared to 78.7% at the same time last year. The four established stores have grown in occupancy from 78.6% to 82.3%. The three developing stores added 23,000 sq ft of occupancy in the year to reach closing occupancy of 50.6%. Overall store occupancy has increased in the year from 78.0% to 81.0%. On a like-for-like basis, excluding Guildford Central, which opened in March 2018, closing occupancy was 81.9%, an increase of 3.9 percentage points.
With the exception of Guildford Central (which opened in March 2018), all of the stores open at the year end are trading profitably at the EBITDA level. The table below shows the average key metrics across the store portfolio (from the Portfolio Summary on page 20) for the year ended 31 March 2018:
| Mature stores |
Established stores |
Developing stores |
All stores |
|
|---|---|---|---|---|
| Average store capacity | 62,040 | 67,750 | 59,330 | 62,240 |
| Average sq ft occupied per store at 31 March 2018 | 51,000 | 55,750 | 30,000 | 50,400 |
| Average % occupancy | 82.2% | 82.3% | 50.6% | 81.0% |
| Average revenue per store (£000) | 1,585 | 1,674 | 622 | 1,550 |
| Average EBITDA per store (£000) | 1,099 | 1,187 | 369 | 1,074 |
| Average EBITDA margin | 69.3% | 70.9% | 59.3% | 69.3% |
Pricing and net rent per sq ft
Our core proposition remains a high quality product, competitively priced, with excellent customer service, providing value for money to our customers. We offer a headline opening promotion of 50% off for up to the first 8 weeks, and we continue to manage pricing dynamically, taking account of room availability, customer demand and local competition.
Over the past eighteen months we have been more aggressive with our pricing strategy to drive occupancy growth, which led to a reduction in net achieved rent per sq ft in the second half of the prior financial year. Following this fall in the period to March 2017, and hence a lower starting point in this financial year, rate stabilised in the first half of the financial year with no average rate growth. In the second half, we achieved period on period average rate growth of 1.5% and as a result the average increase for the financial year was 0.8%. Net achieved rent per sq ft at 31 March 2018 grew by 2.7% over the financial year.
Our pricing model reduces promotions and increases 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 achieved net rents. Rental growth can also be driven through sub-dividing larger rooms into smaller rooms, which yield a higher net rent per sq ft. The table below shows the growth in net rent per sq ft for the portfolio over the year (excluding Guildford Central).
| Average occupancy in the year |
Number of stores |
Net rent per sq ft growth over the year |
|---|---|---|
| 0 to 75% | 10 | 0.8% |
| 75 to 80% | 20 | 3.2% |
| 80 to 85% | 29 | 3.5% |
| Above 85% | 14 | 3.5% |
Armadillo Self Storage
The Group has a 20% investment in Armadillo Self Storage, with the balance of 80% held by an Australian consortium. During the year Armadillo acquired six stores, three stores in April 2017 from Quickstore in Exeter, Torquay and Plymouth, one store in December 2017 from Store it 4U in Stockton, and two stores in March 2018 from 1st Storage Centres in Newcastle and Gateshead.
This takes the Armadillo platform to 22 stores and 963,000 sq ft of MLA. As with the other existing store acquisitions, the intention will be to upgrade and reconfigure the stores through additional investment to drive cash flow growth. In the year to 31 March 2018, £1.5 million of capital expenditure has been invested to upgrade and fit out additional capacity in the Armadillo stores.
Armadillo is a lower-frills brand, with largely freehold conversions of existing buildings. They are located in towns where we would not typically locate a Big Yellow, and have an average capacity of 44,000 sq ft (lower than the 62,000 sq ft average for Big Yellow stores). 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 continues to look for opportunities to add to the Armadillo platform.
Development pipeline
We opened our 55,000 sq ft Guildford Central store in March 2018, and the 25,000 sq ft extension to our Wandsworth store has recently opened. We own a further ten development sites for which planning is to be negotiated, including an existing store where planning is being sought to extend and redevelop. The status of the Group’s development pipeline is summarised in the table overleaf:
| Site | Location | Status | Anticipated capacity | |||
|---|---|---|---|---|---|---|
| Manchester | Prime location on Water Street, central Manchester | Planning consent granted in September 2017. Store construction started in March 2018, with a view to opening in Spring 2019. | 60,000 sq ft | |||
| Camberwell, London | Prominent location on Southampton Way | Planning consent recently granted. Construction due to start in November 2018 with a view to opening in Spring 2020. | 72,000 sq ft | |||
| Kings Cross, London | Prominent location on York Way | Planning application currently being prepared to be submitted in Summer 2018. | 115,000 to 120,000 sq ft |
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| Bracknell | Prime location on Ellesfield Avenue | Site acquired in February 2018. Application to be submitted in late summer to incorporate self storage and other occupiers. | 60,000 to 65,000 sq ft |
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| Slough | Prominent location on Bath Road | Site acquired in November 2017. Planning application to be submitted in late 2018. | 50,000 sq ft | |||
| Battersea, London | Prominent location on junction of Lombard Road and York Road (South Circular) | Potential redevelopment to increase size of existing 34,000 sq ft Big Yellow store. Redevelopment of adjoining retail into a mixed use residential led scheme. Ongoing detailed planning discussions with the Borough Council with the aim of submitting an application later this year. | Up to an additional 40,000 sq ft | |||
| Wapping, London | Prominent location on The Highway | Site acquired in May 2017. We are currently converting the vacant units into a 25,000 sq ft self storage centre, and collecting income from the remaining short-let tenancies. The store will open in summer 2018. | 50,000 to 75,000 sq ft |
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| Uxbridge, London | Prominent location on Oxford Road | Site acquired in April 2018. Planning application to be submitted in Autumn 2018. | 55,000 sq ft | |||
| Hove | Prominent location on Old Shoreham Road | Site acquired in April 2018. Planning application to be submitted in Autumn 2018. | 55,000 to 60,000 sq ft |
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| Hove | Prime location on Scotswood Road | Planning application to be submitted in Autumn 2019. | 60,000 sq ft | |||
| Total | 617,000 to 657,000 sq ft |
The capital expenditure currently committed for the financial year ended 31 March 2019 is approximately £22 million, which includes the completion of the acquisitions of Hove and Uxbridge, and construction costs on Manchester, Camberwell and Wapping.
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.