Abacus Group reveals further details of de-stapling

18 August 2023

Abacus Group has delivered FY23 Funds for Operations (FFO) of $175.0 million, up 8.8% on FY22 and FFO per security of 19.6 cents, up 3.0% on FY22. This result was driven by investments in its core Commercial and Self Storage sectors, and aided by recent development completions that have contributed to higher quality and more resilient income streams.

The Commercial assets, total of 21, delivered 13% growth in net property rental income contribution. This positive result reflects the resilience in our occupancy and income growth levels, which were supported by our diversified lease profile with an Office WALE of 3.7 years (2022: 3.8 years) and our portfolio of majority A grade Office buildings.

Operating conditions for Self Storage were resilient in FY23, with the drivers of Self Storage demand including population growth, housing density and the rise of e-commerce, outweighing the macroeconomic headwinds experienced in the latter half of FY23. The Group’s 131 asset Self Storage portfolio delivered 19% growth in net property rental income. During the year, Abacus acquired 12 new Self Storage assets and delivered four new stores and two expansions from our development pipeline.

Abacus Storage King

Abacus Property Group (ASX:ABP) held an Executive General Meeting (EGM) on 27 July 2023 with 99.97% of shareholders voting in favour of the de-stapling proposal to create two new ASX listed REITs to be referred to as Abacus Group (ASX:ABG); and Abacus Storage King (ASX:ASK). As previously announced, Abacus Group will be the manager of Abacus Storage King and has retained a strategic minority interest of 19.9% in Abacus Storage King.

Post de-staple, Abacus Storage King will be the standalone owner, operator and manager of the Storage King operating platform, and a $3.1 billion Investment Portfolio including 131 Self Storage Properties and Other Investments. Abacus Storage King will be externally managed by Abacus Group and will provide securityholders with access to Australia and New Zealand’s most recognised Self Storage brand.

Post de-staple, Abacus Group will continue to own and manage its high quality, Australian eastern seaboard focused $2.5 billion portfolio. Abacus Group will have diverse income streams including: rental income, investment income from its 19.9% interest in, and management fees from the management of Abacus Storage King.

The two entities will provide separate results from 1H24 onwards. To assist our stakeholders, we have provided a range of pro forma FY23 metrics for Abacus Group post de-stapling and Abacus Storage King in our FY23 Results Presentation.

Abacus Group’s Managing Director, Steven Sewell commented “We were delighted to reach this important milestone in the evolution of Abacus Group. After deploying over $1.4 billion into Self Storage assets over the last five years, we were pleased with the resounding securityholder support and approval for separating the Self Storage portfolio with its own capital structure.”

Abacus Group (ASX:ABG) to focus on Commercial Portfolio

The Commercial Portfolio comprises of a $1.7 billion Office portfolio with 15 assets diversified across several key portfolio attributes including; market, asset grade, asset life cycle, customer industry and customer profile and a $0.8 billion Retail and Other portfolio including two non-discretionary, grocery anchored shopping centres and two further sites underpinned by mixed use fundamentals.

Abacus Group is pleased to reconfirm FY24 guidance of 8.5 cents per Abacus Group Security with a payout ratio assumed to be in the range of 85%-95% of FFO.

Abacus Storage King also reconfirms FY24 distribution guidance of 6.0 cents per Abacus Storage King Security, targeting a distribution payout ratio in the range of 90%-100% of FFO.