Shurgard Big Yellow speculation also shines on Shurgard

Blackstone has confirmed it's considering a cash bid for Big Yellow Group, the UK's leading self-storage operator. Big Yellow separately confirmed that it has held meetings with a "small number" of parties, but added that it has not received a formal bid. Shares in Big Yellow surged >20% on the news, reflecting investor optimism around consolidation in the sector. We believe the impact on Shurgard in the UK is positive. It highlights that private equity investors find the valuation attractive. Big Yellow was trading at a 26% discount to NTA before the speculation broke. We do not believe that a private owner of Big Yellow will initiate a price war. We believe that if Blackstone wins the bid, it will go after profitability rather than share. We recently added Shurgard to our top-pick list as its discount to NTA passed 35%. The company creates a lot more value than the current EPRA EPS indicates. Our company note from August calculates that the shares are actually trading below 10x PE24 if you add the operational gains from its developments. We consider it the cheapest stock in our RE-Universe.