Abacus Acquires Five Self-Storage Properties for $160m

Abacus Acquires Five Self-Storage Properties for $160m

Abacus Property Group has acquired a bevy of self-storage assets worth $160 million increasing its strong commitment to the sector. The portfolio of five assets located in Sydney’s northern suburbs provides more than 25,000 square metres of net lettable.

The five properties in Chatswood, Artarmon, St Leonards, Dee Why, and Pymble are managed by Storage King. More than 40 per cent of Abacus’ $3.6 billion in total assets is now in self-storage facilities. Its core exposure, office property, remains slightly ahead.

In its HY 21 report, Abacus said it had 92 self-storage assets with a valuation of $1.5 billion. So far this year Abacus has spent $440 million on property acquisitions after raising $402 million in late 2020.

Abacus has also recently listed a commercial asset at 444 Queen Street in Brisbane. The building, held jointly with the Public Trustee of Queensland, was acquired for $23.5 million in 2016 and is expected to earn the partners $60 million.

In November 2020, Abacus paid $50 million to acquire 75 per cent of Storage King after securing its initial 25 per cent stake in August 2018 for an undisclosed amount.

Storage King, founded in 1998 by Sydney businessmen Michael Tate and David Scanlen, manages more than 170 self-storage locations, serving more than 50,000 customers.

The self-storage sector has been lifted in recent months by the housing recovery and broader economic rebound as well as the demand for e-commerce.

The sector remains a highly fragmented market with the two biggest players—National Storage REIT and the privately-owned Kennards—each holding more than 10 per cent of the total market.

Abacus now owns outright 101 Storage King facilities that are worth some $1.46 billion, in addition to 100 per cent of the Storage King brand and management business, which operates more than 160 sites across all mainland Australian states.

Managing director Stephen Sewell stated that “This transaction aligns with our strong asset-backed, annuity-style business model where capital is directed towards assets in key sectors that provide potential for enhanced income growth and ultimately create value,”

“Our people, market insight and repositioning capability together with customer-focused brand management are the key enablers of our strategy.”

He also stated that “The assets are within tightly held catchments, benefiting from significant self-storage demand generated from above-average household incomes, large proportions of renters and continually increasing density from apartment development,”

Macquarie Research has an “outperform” on the ASX-listed business and noted Abacus “is continuing to deploy [its] balance sheet, which will aid earnings growth. Increasing exposure to quality self-storage is also positive in our view.

“However balance sheet capacity is reducing, while valuation looks challenging.” The Abacus share price remained steady following the announcement.

At 11:46 am AEST, Abacus Property (ASX: ABP) shares declined 1.5% to AU$3.21 after the real estate investment trust said it had purchased its assets from Storage King, the self-storage group. The acquisition will be funded from existing debt facilities and is expected to complete on 3 August 2021.

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