Big Yellow Group said it will acquire a property in East London for 10.8 million British Pounds, pushing ahead with expansion plans despite a recent slowdown in occupancy growth.
The self-storage company announced on Monday it had exchanged contracts for a freehold site in Bethnal Green, where it plans to build a 68,000-square-foot facility.
The purchase is expected to be completed in 18 months, allowing time to seek planning consent, the company said in a filing.
Big Yellow expects the new center to yield an approximate 8% return on capital once it is fully operational.
The move comes after the company reported in its last quarterly update that closing occupancy had fallen, which it attributed to macroeconomic uncertainty.
The Bethnal Green site is the latest addition to a significant development pipeline, which includes nine sites currently under construction that will add 730,000 square feet of capacity.
"This is a high-quality zone 2 London addition to the Group's pipeline; opportunities to acquire sites in this location are rare, and there is very little existing self storage supply in the local area," Chief Executive Officer Jim Gibson said.
More from this issuer
Related coverage
Big Yellow Group on Monday reported a 9% rise in first-half adjusted profit, presenting a mixed picture of rising rents and falling occupancy for private equity firm Blackstone as it weighs a potential takeover bid.
Blackstone has been granted an extension to its deadline to either make a formal takeover offer for Big Yellow Group or walk away from a potential deal.
Big Yellow Group on Friday confirmed its total shares in issue, a formal step required under UK takeover rules after the company became the subject of bid speculation.
Private equity firm Blackstone is considering a potential cash offer for Big Yellow Group, the UK's largest self-storage provider, the company said on Monday.