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Australia Self-Storage Operator National Storage REIT Fields Takeover Bids

Update 3/19/20 – Public Storage has withdrawn it’s bid to acquire NSR due to market conditions affected by the coronavirus pandemic. NSR officials characterized the bid withdrawal as a pullback “at this time.” It’s unclear if Public Storage may revisit its pursuit of NSR once markets stabilize, or if either of the other bidders that previously withdrew their offers will resubmit acquisition proposals.

“Whilst we spent some time pursuing three unsolicited, indicative offers that may have been attractive opportunities to maximize value for our securityholders, we remained focused on our core business throughout those discussions,” NSR Managing Director Andrew Catsoulis said in a released statement. “NSR will continue to focus on its strategy of maximizing returns via our diversified revenue streams as outlined in our 1H FY20 results discussion with our securityholders.”


3/3/20 – Public Storage, with a bid of $1.25 billion, is now the only bidder in line to acquire NSR after Gaw and Warburg withdrew their offers last week. It’s still conducting its due diligence, according to a source.

Shares for NSR recently fell as much as 6 percent, outpacing broader market losses of 3 percent, a source reported. NSR officials have suggested investors take no action at this time. They also noted that Warburg has the right to revisit its decision.


2/19/20 – Public Storage Inc., a U.S.-based real estate investment trust and third-party management firm, and New York-based private-equity firm Warburg Pincus LLC have also made bids to acquire NSR. Public Storage has offered $2.40 per share for Australia’s largest operator, which is valued at $1.9 billion. Warburg pledged $2.20 per share, valued at $1.73 billion, which matches the Gaw offer. NSR has acknowledged it is in talks with all three companies.

"NSR continues to work with these three parties in relation to proposals to acquire NSR and notes that discussions with each party are, at this stage, preliminary and subject to a number of conditions; and there is no certainty that the discussions will lead to a final recommended offer,” NSR officials said in a released statement. “The board of NSR is committed to acting in the best interests of, and maximizing value for, NSR securityholders.”

All three bids for NSR were unsolicited, according to company officials.

Public Storage is the largest operator in the United States. Based in Glendale, Calif., the REIT has interests in 2,468 self-storage facilities in 38 states, with approximately 167 million net rentable square feet. It holds a 35 percent interest in Shurgard Self Storage Europe SARL, which operates 237 self-storage facilities comprising 1.2 million net rentable square meters in Belgium, Denmark, France, Germany, The Netherlands, Sweden and the United Kingdom.

Warburg Pincus invests on a global scale. It has more than $58 billion in assets under management, with an active portfolio of more than 190 companies. Founded more than 50 years ago, it’s raised 19 private-equity funds, which have invested in excess of $81 billion in more than 890 companies and 40 countries. The company’s interests are spread across the following sectors: energy; financial-services; healthcare; industrial and business-services; and technology, media and telecommunications.


1/28/20 – Hong Kong-based real estate equity firm Gaw Capital Partners has made a nonbinding proposal to acquire Australia-based self-storage operator National Storage REIT (NSR). The offer is to purchase 100 percent of NSR, which operates more than 170 storage facilities across Australia and New Zealand.

“Discussions are, at this stage, preliminary and subject to a number of conditions, and there is no certainty that the discussions will lead to a final recommended offer,” NSR said in a released statement confirming to the Australian Securities Exchange that it had received the confidential bid.

Gaw is a private-equity fund manager with global interests, specializing in “adding strategic value to underutilized real estate through redesign and repositioning,” according to its website. The offer to take over NSR comes about a month after the firm announced it had raised $2.2 billion for Gateway Real Estate Fund VI, its sixth equity fund. Gaw also secured a sidecar co-investment commitment of up to $800 million, according to a press release.

Though Gaw didn’t mention self-storage in announcing the close of Fund VI, officials indicated the company would “target real estate assets with favorable risk-return profiles mainly in Greater China and with selected exposure in Japan, Vietnam, South Korea, Singapore, Southeast Asia and Australia.” The fund will also consider “operating thematic platforms and pre-IPO real estate companies looking for strategic capital in order to capture specific market trends and address particular needs.”

“We are delighted to be closing Fund VI after a highly successful fundraising round. The commitments we have received are a strong vote of confidence in Gaw Capital’s approach to adding strategic value to a diverse range of underutilized real estate assets throughout the Asia Pacific region and its ability to deliver value for investors,” said Christina Gaw, managing principal and head of capital markets for Gaw Capital. “Our increased expansion into thematic platforms such as data centers, healthcare and education-related real estate platforms are very welcomed by our investors. These are followed by our successful execution in other existing thematic portfolios such as retail outlet malls and logistics. The fund serves as an important investment vehicle for investors looking to get exposure to this high-growth region while achieving portfolio diversification.”

NSR is the first independent, internally managed and fully integrated owner and operator of self-storage centers to be listed on the Australian Securities Exchange. The company has advised its shareholders to not take any action regarding their company investments. "NSR remains fully committed to acting in the best interests of, and maximizing value for, NSR security holders," officials said.

NSR ranked No. 11 on the Inside Self-Storage 2019 Top-Operators List for facility owners. It’s owned portfolio comprises more than 9.5 million square feet.

Founded in 2005, Gaw has raised $16.5 billion in equity and had $23 billion in assets under management at the end of the second-quarter 2019, according to its website.

Sources:
National Storage REIT, Update on Negotiations With Public Storage
Reuters, Australia's National Storage REIT Says Public Storage Drops $1.25 Bln Takeover Bid
Financial Review, Pens Down in $1.9B National Storage REIT Takeover
SpareFoot Storage Beat, Public Storage Launches Buyout Bid for Australia’s National Storage REIT
National Storage REIT, Receipt of Unsolicited Non-Binding Indicative Proposal From Public Storage
National Storage REIT, Receipt of Unsolicited Confidential Non-Binding Indicative Proposal From Warburg Pincus
Reuters, Australia's National Storage REIT Says Warburg Pincus Has Made A$1.73B Bid
Deal Street Asia, HK’s Gaw Capital Offers to Buy Australia’s Largest Storage REIT
National Storage REIT, Receipt of Non-Binding Indicative Proposal
Gaw Capital Partners, Gaw Capital Partners Successfully Completes Final Close of Gateway Real Estate Fund VI at US$ 2.2 Billion
New York Times, Public Storage Only Bidder Left for National Storage With $1.25 Billion Bid

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