Abacus Golden Opportunities In Self Storage
Abacus Golden Opportunities In Self Storage
Abacus Property Group, the Australia-based, publicly-traded real estate investment trust (REIT), attributes more of its revenue to self-storage, space for individuals to rent and store their personal or business belongings, which is being lifted by the housing recovery and broader economic rebound as well as the demand for e-commerce.
Abacus has been involved in the self-storage sector since 2005 and has become one of Australia’s largest owners of Self Storage facilities in the region.
As of June 30, the Abacus property group purchased a 25 per cent Interest in Storage King who licensed and managed more than 170 self-storage locations. As part of the deal, Michael Tate the company’s co-founder and CEO will remain in his leadership role and join the Abacus executive team. Tate and co-founder David Scanlen each sold a 37.5 per cent stake in the company, a source reported. Presently, Abacus manages a $1,207 million self-storage portfolio across 81 assets providing 320,901 sqm of self-storage space. This portfolio is located across Australia’s east coast and throughout New Zealand.
In the first half of 2020, self-storage accounted for around 36 per cent of total assets. Six months later, 42 per cent of Abacus’ $3.6 billion in total assets was dedicated to self-storage facilities, pipped slightly by its exposure to office property. The remaining property portfolio comprises retail, industrial, and a small proportion of non-core assets which are being progressively reduced.
Further swaying to self-storage will result in nearly $150 million in acquisitions including taking over the remaining three-quarters of the Storage King operating platform for around $50 million last November.
Steven Sewell, the managing director of the self-storage, said 2020 has been a momentous year for the group’s investment in the key sector of self-storage.” The portfolio includes more than 90 facilities and, after some softness earlier in the year, Abacus’ self-storage portfolio is experiencing some of its strongest trading conditions key markets for some time”.
There are golden opportunities for a stronger performance from the housing market recovery, the economic rebound, the surge in e-commerce and home business, and even the need to declutter to accommodate more working from home. “[They are] all strong, supportive factors to the self-storage sector,” Mr Sewell said.
Funds from the operation, the earnings measure preferred in the property sector, increased by 17.4 per cent over the 2020 first half to $31.7 million. From its office portfolio, the contribution rose 23.9 per cent to $41.5 million. Overall FFO dropped nearly 10 per cent to $60.6 million, due to a reduced contribution from non-core sectors. Statutory profit rose 85 per cent to $151.8 million, boosted by portfolio book value gains. Boosted by a $402 million raising in December, Abacus has the firepower it needs to seize on fresh self-storage opportunities while pumping investment into development opportunities in its office portfolio.
This month as well Abacus struck a $56 million deal with Rich Lister Lang Walker, who has taken a half stake at 710 Collins Street, the heritage-listed Goods Shed, opposite Walker Corporation’s massive Collins Square project. An office tower project has been mooted for the site for some time, Mr Sewell said. “We think that still has potential. To what scale and in what design format is what we are working through with Walker.
“We’re very excited to be working collaboratively with their team to deliver that.”
References:
– SELF STORAGE
By Abacus Property
https://www.abacusproperty.com.au/portfolio/self-storage
– Australia REIT Abacus Property Group Acquires the Remainder of Storage King for $50M
by Inside Self-Storage
– Abacus finds returns in self-storage
by Nick Lenaghanhttps://www.afr.com/property/commercial/abacus-finds-returns-in-self-storage-20210218-p573ob