Self-storage firm Big Yellow should consider a sale, says activist investor

Big Yellow Group should review its operations and consider putting itself up for sale, a US activist investor has declared.

Ohio-based Ancora Holdings, which holds a four per cent stake in the self-storage firm, said a sale would represent the best risk-adjusted outcome for shareholders.

Big Yellow Group's shares have plummeted to multi-year lows this year as a slowing housing market and sluggish economic growth weigh on demand.

Ancora said the shares trade at an 'unwarranted discount' to net asset value, estimating the group, which is trading at £8.42 per share after a 5 per cent uplift this morning, is worth £12.36 per share.

It comes nearly a year after the collapse of a potential sale to Blackstone. 

Ancora said the private equity giant had offered 50 per cent above the current share price and that the storage firm could yield a higher offer now.

It said Big Yellow remained 'an attractive asset' given its 'relative cheapness' compared to US storage real estate investment trusts (REITs) and the 'scarcity value' of its UK portfolio.

The wealth management and advisory firm said in addition to a sale, Big Yellow could take 'pragmatic value-enhancing actions such as divesting non-core assets,' rebranding or selling its Armadillo division and monetising its property development pipeline.

Armadillo is a sub-brand of Big Yellow which runs smaller storage facilities in the Midlands and North of England.

Ancora added: 'These actions, combined with a likely recovery in occupancy and the possibility of an improved UK/London economic environment, could cause Big Yellow's shares to materially re-rate from trough levels.'

London-listed firms have become a target for a growing number of activist investors pushing for sales or takeovers as mergers and acquisition activity rebounds.

Investment trusts have come under particular pressure, led by Boaz Weinstein's Saba Capital which has targeted those trading at deep discounts.

Meanwhile, consumer-focused brands including Premier Inn owner Whitbread and retailer The Works are embroiled in rows over board seats.

Whitbread urged shareholders on Tuesday to reject activist Corvex's efforts to gain a seat on the board. The US hedge fund this month requisitioned a general meeting with the aim of installing one of its partners as a director.

The chairman of The Works is being questioned over his meeting attendance by investment firm Kelso, which holds a 10 per cent stake in the firm.