Big Yellow, the self-storage company, today revealed a solid set of half-year results after yesterday agreeing a £150m tie-up with Pramerica Real Estate Investors for expansion in the north of the UK.

The REIT increased net asset value by 8% to 472p a share in the six months to 30 September and pretax profits by 3% to £7.2m. The interim dividend was raised by 14% to 4p a share. The NAV uplift was driven by a 5.5% increase in the value of the ‘same store’ portfolio, of which 0.5% came from capital growth and 5% from operational performance.

Net yield
The net yield of the portfolio, which was valued at £789m including developments and surplus land, was 6.75% down from 6.8% in March.

Chairman Nick Vetch sounded a note of caution: ‘We are currently experiencing more testing trading conditions,’ he warned. ‘That said this is a seasonally weak trading period, and we hope to see the usual pick up early in the new year.

‘The group enjoys high operating margins, strong cash flow, relatively low debt gearing and owns 90% of its property assets freehold. This we believe will provide resilience to outside influences, although not complete immunity.’

Big Yellow’s shares dropped 3% to 421.75p in response to Vetch’s cautious statement.

But JP Morgan analyst Harm Meijer said: ‘We like Big Yellow and believe it should be a preferred pick within UK property because of its high quality brand, great management, strong like-for-like growth of 7%, strong balance sheet (32% loan to value) and relative high net yield (before overhead costs) of 7.4%’.