National Self Storage takeover — Abacus buy-up is back on again!
By Robert, Stanley-Turner
Well, according the the AFR on May 15, the Abacus buy up of shares is back on again! If this results in a controlling interest, I don’t see it as a good thing for our independent self storage owner clients. Abacus have built up a 7% shareholding in National, taking advantage of a substantially reduced share price after the takeover blitz earlier in the year (please see notes below). As I have said before I do think that Abacus will eventually gain control of National and in the event they do, independent self storage operators should get ready for increased competition. Storage King which is partly owned by Abacus, have a network of 168 facilities and National have 170 facilities. Please let me know if you want me to send a copy of the AFR article which appeared on Friday 15, May 2020
As expected all offers have now been withdrawn from the pending purchase of National Self Storage. The final offerer and most likely, Public Self Storage (USA), formally withdrew their offer reasoning that the current conditions were working against the successful takeover. As at 5pm today the share price is trading at $1.30, or in other words 30% below what is trading at a few days ago…. interesting times
03/03/2020 and updated 10/03/2020
As expected, both Warburg and Gaw have now formally withdrawn their offers. And you know, a big call here, I think that Public Self Storage will also. The reason being is that it appears that their shareholder base does not want it to happen. And my confidential sources tell me that ASX investors are sceptical also. Currently, the offer price is around $2.40 when National SS is trading at $2.09. My sources tell me that investors are hedging their bets in terms of the likely hood of the deal proceeding, otherwise, the trading price would be closer to the offer price. As discussed, I don’t see any advantages for us to lose local ownership of National Self Storage to a huge operator such as Public Self Storage (USA).
On Tuesday the 18th of February 2020 another buyer has stepped in, this time its Warburg Pincus. Whilst a quick scan through their website shows an impressive organisation, its just not realistic to think that any party other than Public SS will have the financial or industry power to beat them (Public SS) in the quest for the take over of National Self Storage. In other words, I think the Warburg Pincus interest is in speculation only.
Late on Friday night, the news in of Public Self Storage’s potential takeover bid for National Self Storage. This news was hot on the heals on Gaw Capital’s takeover offer about a week ago.
To me, it looks like the game is over for everyone other than Public Self Storage to succeed in taking over National SS. It’s even hard to think that directors of National themselves will be able to thwart the bid with the massive increase in the share price that Public Self Storage is offering.
The US public-listed “Public self-storage” is probably the largest Self Storage company in the world with 2500 SS facilities and a market cap of around US$40B, a big fish as compared with National Self Storage at AUD$1.9B. But yet, National SS is still, Australia’s largest SS business with around 130 facilities.
And the interest from these two groups, Public Self Storage & Gaw Capital followed the secretive acquisition of small interest, (some may say initial takeover interest) from Abacus Property Group who own and operate self-storage facilities under the “Storage King” brand.
We are concerned with what is happening with these potential takeovers, as we have near-perfect conditions for selling self-storage facilities right now with around 10 aggressively expanding groups. We hope that whoever triumphs with the ownership of National that they continue to want to expand and keep the competition as intense as it is. But then again too much competition emanating from one large group like Public Self Storage can mean huge power to discount storage rates and also provide un-equal buying power to compete against existing companies wanting to acquire. Anyway, we wait and watch the show. If you would like a copy of the AFR article please call or email and I shall send it through.
You can check out Public Self Storage here.
Notes from 24/01/2019
According to Business News Australia, National Self Storage has received a takeover offer from Gaw Capital from Hong Kong. Click this link to see Gaw Capital
It was only a matter of time until an Asian based investors take an equity position an Australian Self Storage company.
Asia is a huge market, and in time we predict there will self-storage companies as large or larger than Australian companies as a result of the market size.
Australian owned self-storage companies will be very attractive to Asian companies because :
- Australia has freehold land: Self Storage facilities throughout Asia a predominately built on leasehold land. This has inhibited growth as investors have been reluctant to invest in self-storage infrastructure with only a maximum of 25 years tenure whereas Australia has unlimited tenure via freehold.
- Ageing Demographic. Retiring workers need income. Just like in Australia they use their superfund to generate retirement income. Stock exchange-listed Real Estate investment trusts (REITs) in Asia are very popular to invest in for this reason. And REITs are large owners of Self Storage companies because they offer stable rental income. These self-storage companies need to expand quickly in order to satisfy individual investor demands. Asian self-storage companies are also limited in what they can buy because of the leasehold problem. Australia offers an excellent quick-fix solution to expanding quickly, freehold and stable income.
- Technology efficiencies With any new industry within a large market, it is easier to build something new with all the latest bells and whistles. Technology has come a long way for self-storage, and these start-up self-storage companies are embracing not only the latest hardware for the facility but also the latest in marketing techniques particularly those involving social media. The net result is that the modern facility is very efficient and that’s got to mean profitable. And a company that is profitable is a company that can expand.
Also it will be interesting to see if Abacus Property Group who already have a small shareholding in National react. Box Commercial is a member of the Self Storage Association of Asia, SSAA and we will hopefully have more news on this story shortly.
Here is a copy of the article Click here for the Business News Article