US private equity heavyweight Blackstone is reportedly eyeing a takeover bid for London-listed self-storage firm Big Yellow, which could mark another significant acquisition of a UK company by a US investor. Prior to the announcement, Big Yellow’s market valuation stood at around £1.9 billion. Following the news, its shares surged by over 15%, reflecting investor optimism about a potential deal. However, Blackstone has indicated that its interest remains at a preliminary stage and that upcoming UK Budget tax changes could influence whether it proceeds with a formal offer.

Blackstone’s growing footprint in the UK commercial property sector was underscored earlier this year with its £489 million acquisition of logistics specialist Warehouse REIT, outbidding UK-listed real estate group Tritax Big Box. Further cementing its position, Blackstone recently disclosed a complex transaction with Tritax Big Box: it will take a 9% stake in the company, becoming its second-largest shareholder, as part of a broader portfolio sale worth approximately £1 billion. This deal involves transferring 41 logistics properties across the UK to Tritax, expanding Tritax’s coverage, particularly in high-demand urban and small-box logistics markets in the South East and Midlands.

The London-based Big Yellow offers self-storage solutions at over 100 locations and is commonly used by customers when moving homes. Blackstone has signalled it is considering a cash offer for Big Yellow, but according to the firm, the assessment includes a careful review of macroeconomic factors like the anticipated Budget’s impact on the self-storage sector. Under takeover regulations, Blackstone has until 10 November to either make a firm bid or withdraw its interest.

Big Yellow has acknowledged holding talks with a few parties regarding potential strategic options, including a possible sale, but maintains it has not received any formal takeover proposals or engaged in active sale discussions. Industry analysts note that the Chancellor's forthcoming Budget could be pivotal for Blackstone’s final decision. Russ Mould of AJ Bell commented that Blackstone’s initial expression of interest positions it well to move swiftly if the Budget does not introduce measures that would undermine the sector’s attractiveness.

Blackstone’s strategy forms part of a larger trend of US investors consolidating UK commercial real estate assets amid a climate of weaker valuations and market uncertainty. The company, helmed by Wall Street veteran Stephen Schwarzman, has rapidly grown its European logistics portfolio to capitalise on surging demand spurred by the boom in online retail.

The logistics portfolio sale from Blackstone to Tritax Big Box REIT, involving about 6.5 million square feet of space across 409 units, is being financed through a combination of £632 million in cash, made possible via a new £650 million debt facility, and £375 million in newly issued Tritax shares at a premium to market price. This share issuance effectively boosts Blackstone’s stake in Tritax to just under 9%, making it a significant shareholder and signalling closer strategic ties between the two firms.

This raft of transactions highlights Blackstone’s intensified focus on logistics and storage assets in the UK, combining property acquisitions with strategic equity positions to enhance its influence in the market. How Blackstone’s interest in Big Yellow will develop, especially given the potential tax implications from the UK government’s upcoming Budget announcement, remains a key point for market watchers.

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Source: Noah Wire Services