Australia-based self-storage operator National Storage REIT (NSR) has agreed to acquire 30 facilities in multiple deals for a combined $301 million. The primary purchase is the 26-property portfolio operated under the Southern Cross Storage Group investment fund, which NSR manages and in which it owns a minority stake. The real estate investment trust also intends to buy a three-property portfolio in Perth and a single facility in Cairns, Australia. The aggregate purchase comprises 138,400 net rentable square meters and 14,240 units, according to a press release.
The Southern Cross portfolio stretches across Australia, comprising 126,000 net rentable square meters and 13,000 storage units. It will be acquired for $285 million, the release stated. The unlisted investment fund was established in September 2011 through a joint venture between NSR and Heitman LLC, a global real estate investment-management firm. Heitman owns 90 percent of the portfolio, but the venture agreement granted rights to NSR to purchase Southern Cross, according to the REIT’s 2015 annual report.
"The acquisition of the Southern Cross portfolio is transformational for NSR, enlarging our asset base by 26 centers, including two dedicated wine-storage centers,” said NSR Managing Director Andrew Catsoulis. "This acquisition reinforces our position in the Australian and New Zealand self-storage market by securing long-term ownership of strategically important assets. These assets are highly complementary to our existing property portfolio and are already fully integrated into our platform. In addition to the value derived from our deep knowledge of the Southern Cross portfolio assets, there is potential to unlock further value as these centers continue to mature, with additional upside potential from further expansion, development or redevelopment of some assets."
The four additional self-storage facilities NSR has agreed to buy comprise 12,400 net rentable square meters and 1,240 units. They will be purchased for a combined $16.1 million.
When complete, the acquisitions will bring NSR’s footprint in Australia and New Zealand to 523,000 square meters and 56,000 units.
The transactions will be funded through a combination of debt and $260 million in equity raising. NSR will raise $101 million through an institutional placement of new, stapled securities and $159 million through a “pro-rata accelerated non-renounceable entitlement offer,” according to the release. In all, 63.6 million new shares are being offered at $1.58 each. The entitlement offer also lists shares at $1.58 each.
“We continue to maintain a strong pipeline of potential acquisitions, with approximately $100 million of assets currently under consideration and advanced negotiations underway for approximately a further $30 million of assets," Catsoulis said.
NSR operates more than 90 self-storage facilities in New South Wales, Northern Territory, Queensland, South Australia, Victoria and Western Australia. It’s the first independent, internally managed and fully integrated owner and operator of self-storage centers to be listed on the Australian Securities Exchange.