Big Yellow sells Harrow industrial estate for £38.4m

(Sharecast News) - Big Yellow said it has sold its industrial estate in Harrow, London, for £38.4m, subject to a £2m retention from the sale price, which will be released on the satisfaction of certain conditions. Proceeds from the sale will be used to fund the build out of 11 new stores and one replacement store in the development pipeline on land owned by the group. On a proforma basis, the 12 pipeline stores are expected to generate £35m net operating income. This represents an income return of 16.5% on the £212m total cost to complete.

"The board believes that currently there is no other use for the capital that comes close to delivering this level of long term returns," it said. The new store development will be completed within existing funding arrangements.

The company also said it continues to forecast a net debt to EBITDA ratio of between 3.5x and 4x over the short to medium term, trending over time to its preferred level of up to 3.5x. "This reflects the board's long held view that the unwarranted risk from elevated levels of debt outweighs the potential rewards," it said.

"The board and management will remain thoughtful and disciplined in executing the group's strategy, including the delivery of the new stores, several of which are in key Central London locations."

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