Blackstone Lines Up £2.2B Megadeal As UK Self-Storage Takes Off
Investment giant Blackstone has confirmed that it is considering lodging a bid to acquire the UK's largest self-storage business, Surrey-based Big Yellow Group.
The deal could cost at least £2.2B after Big Yellow shares rose by as much as 15% at one point after the UK self-storage market leader confirmed that it had held meetings “with a small number of parties in relation to a range of potential options, including a potential sale of the company.”
Although self-storage is a niche real estate sector in the UK, it is viewed as having major potential for growth. The sector is valued at about £12B today but could grow to more than £30B, according to a report last year from law firm Macfarlanes.
“Blackstone is considering, amongst other factors, the macro-economic environment including the potential impact of the upcoming UK budget as it relates to the self-storage sector,” the U.S. private equity giant said in a stock exchange announcement.
To comply with regulatory rules, Blackstone must either announce a firm intention to make an offer or decline to pursue a bid by 10 November.
The emerging UK self-storage market has attracted increasing interest from international investment groups. At the start of the year, several private equity firms, sovereign wealth funds and listed companies were linked with bids for Access Self Storage, including TPG, Aermont, QuadReal Property and Shurgard.
The company had appointed JPMorgan Chase last year to find a buyer for the company, valued at about £1.2B. However, discussions over a potential sale of Access, which has more than 60 sites across the UK, stalled in April and have not progressed since.
Meanwhile, in June, U.S.-headquartered investor Harrison Street announced its £150M entry into the European self-storage market after forming a UK joint venture with property and asset management group Pacific Investments.
The Harrison Street-Pacific JV set out plans to invest around £150M over the next two years, and Harrison Street Managing Director and Head of European Transactions Josh Miller told Bisnow that he was looking at the move as a scalable opportunity, with further plans to enter Western Europe in the next 12-24 months.
The portfolio was seeded with three assets comprising approximately 138K SF of lettable space, with Pacific’s majority-owned self-storage property management platform, Engage Management Services, operating the assets under the Here Self Storage brand.
