Equity prospects

BIG YELLOW

James Ayling, CFA, Research Analyst

Price£10.66

52 week high-low£12.45—£9.53

Net yield3.03%

Hist / pros per11.07—25.23

Equity market cap£1,796

Big Yellow is a UK listed Real Estate Investment Trust (REIT) and a constituent of the FTSE 250 Index. Its REIT structure means it is required to pay out the majority of its property rental income each year to shareholders. It is a leading UK self-storage business that either owns or leases storage facilities in the UK; it operates c.100 Big Yellow stores and also holds a stake in the smaller Armadillo Self-Storage company. Operationally, Big Yellow segments its storage facilities into ‘storage rooms’ to allow either retail customers or businesses to flexibly rent out temporary storage space. Big Yellow benefits from structural growth of the UK self-storage industry where increasing urbanisation is driving higher consumer demand for storage solutions. Additionally, Big Yellow operates purpose built storage warehouses, a faster growing market segment, versus lower quality container based self-storage. Big Yellow benefits from its distinctive brand, premium locations and, operates larger than average warehouses giving operational scale.

Investors award Big Yellow a premium valuation. As Big Yellow charges customers a premium price - it could be more vulnerable, in harder times, versus cheaper lower quality rivals.
          

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