Abacus Property Group Pursues De-Stapling of Self-Storage Assets Into Separate REIT

Update 5/25/23 – As part of its proposal to de-staple its self-storage assets to create Abacus Storage King (ASK), Abacus Property Group commissioned independent valuations for its self-storage and commercial property portfolios. The assessment resulted in a A$65.7 million net increase to its self-storage properties and a A$2.6 billion valuation, according to a press release.

“These independent valuations provide investors with a comprehensive update ahead of the proposed de-stapling,” Sewell said. “Pleasingly, we have seen positive momentum continue in our A$2.6 billion self-storage portfolio, most notably in the valuer’s assumption of rents, which have risen 3.2% so far this calendar year. The self-storage portfolio has delivered a year-on-year, double-digit, annualized rental increase demonstrating portfolio resilience sourced from our diverse customer segments. The increase in valuations of the self-storage portfolio is estimated to result in the gross assets of ASK totaling in excess of A$3 billion as of April, 30 2023.”

Abacus also indicated it would seek to raise A$330 million to A$350 million via a pro-rata offer to shareholders for the demerger. The company intends to submit documentation for shareholders ahead of a scheduled vote in July. If approved and the proposal meets regulatory standards, ASK is expected to begin trading on the stock exchange in August, the release stated.

The beginning portfolio is now expected to include 110 Storage King facilities and 21 development properties.

In addition, Abacus has tapped John O’Sullivan to serve as ASK board chair, along with the proposed appointments of Mark Bloom, Stephanie Lai and Karen Robbins as non-executive directors. It also proposed to install Sewell as executive director of ASK, while he remains managing director of Abacus Group, according to the release.

2/17/23 – Abacus Property Group, an Australia-based, publicly traded, diversified real estate investment trust (REIT) with interests in self-storage, intends to create a separate REIT under the name Abacus Storage King (ASK) by de-stapling its existing assets. The resulting company would be listed on the Australian Securities Exchange under ASK and have a largely independent board of directors. Abacus Property Group would manage the REIT and retain a minority interest of up to 19.9% of its stapled securities, according to a press release.

ASK REIT would begin with a portfolio of 108 Storage King facilities comprising more than 568,000 square meters, plus 19 development properties and an expansion pipeline that will eventually add another 115,300 square meters. The gross asset value of the new REIT would be about $3 billion, the release stated.

“Abacus has deployed over $1.2 billion into self-storage assets over the last five years and has determined that the portfolio has reached a scale where it makes most sense to be separately listed with its own capital structure,” said Steven Sewell, managing director. “The creation of ASK as a dedicated self-storage REIT will provide security holders with pure-play exposure to the Storage King portfolio and operating platform. The self-storage market has attractive market fundamentals supported by macroeconomic tailwinds including an imbalance in supply and demand for self-storage space, densification of residential property, and the growth of e-commerce.”

The move requires approval by shareholders, who are expected to vote by the end of the second quarter. If approved, ASK REIT would begin trading on the stock exchange shortly thereafter, according to the release.

Under the new structure, Abacus Property Group would continue to own and manage its $2.6 billion portfolio of diversified real estate assets that includes office, residential and retail properties.

Sources:
Abacus Property Group, Update on Proposed De-Stapling to Create Abacus Storage King - A $3.0Bn ASK Listed Self Storage REIT
Financial Review, Abacus Self-Storage Demerger Roadshow in Two Weeks, Raising $350M
IP&E Real Assets, Abacus Property to Spin-Off A$3bn Self-Storage Assets Into ASX-Listed Trust
Abacus Property Group, Proposed De-Stapling to Create a $3.0bn ASX Listed Self Storage REIT
Financial Review, Abacus Opens the Door to $3B Self-Storage REIT