StorageMart buys Big Box

US operator StorageMart’s record £100m acquisition of Big Box Self-Storage is part of an anticipated wave of consolidation in the sector as new entrants and existing operators look to amass scale. The deal is the largest investment in the UK self-storage sector and provides StorageMart with a substantial platform from which to grow. Big Box Self-Storage’s 15 stores total nearly 700,000 sq ft and are located across the South East. It is a deal that investors will look to emulate as they look for growth in a sector to which entry is often difficult. President Cris Burnam said: “We plan to use the substantial self-storage platform to expand within the UK. These are great locations in solid markets and we look forward to applying our technology and revenue management strategies.” Other consolidation opportunities are most likely to arise from businesses looking to exit the sector. However, for investors keen on building bulk in the sector, portfolio opportunities are rare as many investors are long-term holders – some are family offices running the business for their pensions. Ollie Saunders, lead director of alternatives at JLL, which acted for Big Box, said: “There was strong interest in the portfolio from a variety of investors that were attracted to a sector which has demonstrated predictable cash flows and is benefiting from rapidly increasing consumer awareness. “Strong user demand and increasing urbanisation are key factors driving the boom in the self-storage market and opening up opportunities for old and new investors alike.” The UK self-storage market is dominated by the three listed companies – Safestore, Big Yellow and Lok’nStore – which combined represent 19% of the self-storage market. The majority of their holdings are in London and the South East, the most lucrative self-storage region in the UK. Consumer awareness for the sector is increasing, which in turn is expected to boost demand and rents. The most recent annual survey of the sector, compiled by the Self Storage Association and Cushman & Wakefield at the end of December 2015, found that 90% of respondents had heard of self-storage, up from 77% in 2014. Buy-outs are the best way in James Gibson, chief executive of Big Yellow Self Storage, says: “In the current self-storage landscape, the larger brands hold the majority of the purpose-built prime assets. Therefore, to enter the market or to consolidate existing market positions, self-storage companies have been focusing on buying existing assets outside the major cities. “New development is very difficult, particularly in London and the larger cities, given the competition for land from all sides of the property market, including residential developers. “This, coupled with complex planning processes, means that even when successful, it can take three to four years to open a new store in bigger cities.” Key consolidation deals in 2016 April: Big Yellow acquires Lock & Leave portfolio of 12 stores for £21m June: Safestore buys Space Maker Stores, comprising 12 stores, for £44.4m October: StorageMart buys Big Box Self-Storage’s portfolio of 15 stores for £100m Leading self-storage players • Safestore Holdings £750m market cap – 95 stores • Big Yellow £1.4bn market cap – 71 stores • Lok’nStore £88m market cap – 12 stores The self-storage market The UK market has 16.5 stores per million population, compared with 157.4 stores in the US Self-storage remains a highly fragmented industry, with the top 10 brands in Europe representing only 25% of the total size of the industry The UK is the largest European market with nearly 40% of all the region’s self-storage facilities • To send feedback, e-mail amber.rolt@estatesgazette.com or tweet @amberrolt or @estatesgazette