Determining Self-Storage Value in Europe

Tim Edghill and Chris Stevens Comments
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Space Maker is one of the top 10 operators in the United Kingdom, operating predominately in South and Southeast England. The business offers a strong platform for growth. Its value was assessed using various methods, but centered on the DCF approach. The company sold for an EV/EBITDA multiple approaching 18, suggesting that investor sentiment for U.K. self-storage storage remains healthy.

This level compares favorably with Safestore’s EV/EBITDA multiple of 18.2. Interestingly, Big Yellow trades on a higher multiple, indicating the market attaches significant value to the development pipeline and land bank of the company, which offers significant and secure growth potential.

The U.K. self-storage industry is more than likely set for a general consolidation in the next few years. The acquisition of Space Maker by Babcock & Brown, the Australian investment fund, could be the first step toward global consolidation of inter-country or inter-region brands. There are indications that a number of smaller operators are considering exit opportunities, which will be welcome news to those players seeking secure geographical dominance and expansion.

The consolidators see the value in existing operational businesses and are able to apply appropriate valuation methods. Consolidation and organic expansion will become increasingly important, and the accretive value of good operators to the larger players will fuel the growth of this exciting sector.

Tim Edghill and Chris Stevens are with Jones Lang LaSalle Corporate Finance, which provides comprehensive mergers and acquisitions, restructuring and financial-advisory service across real estate sectors. Mr. Edgehill has more than 15 years of experience in real estate and finance, and can be reached at tim.edghill@eu.jll.com. Prior to joining the company, Mr. Stevens was a property finance account manager with a New Zealand bank. He can be reached at chris.stevens@eu.jll.com. For more information about the company, visit www.joneslanglasalle.eu/corporate-finance.

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