Abacus have released details of their proposed de-stapling of the Storage King assets and have commenced an investor roadshow to shore up support for the alternative asset class.
The new REIT to be known as the Abacus Storage King (ASX:ASK) will contain the $3.0bn storage kings portfolio of assets and the Storage King business platform to become a fully integrated owner, operator and manager of specialist self storage assets.
Mr Sewell commented “Abacus is delighted to reach this important milestone and we are looking forward to engaging with investors ahead of the EGM planned for July”
The initial portfolio will house 131 houses across Australia and New Zealand with a further pipeline of 21 stores already in the various phases of development. Storage King claim to hold a 14% marketshare, ranking second by National Storage.
The development and expansion pipeline is expected to bring a further $434m of assets on completion with 87,100sqm of NLA. To date $170m has been invested in these assets with a cost to complete of $200m, providing a margin on cost of 17%.
The Storage King business platform also manages 86 Storage King stores owned by third parties and operated by Storage King under licence agreements. The platform employs over 500 staff across the portfolio Abacus focused on revenue management, marketing, customer engagement, delivery of the business plan and the provision of services to ASK and third party owners. Over time, Abacus Storage King business holds pre-emptive rights over the majority of third party owned assets which could allow Storage King to acquire those assets should those licensee owners wish to sell. To date, 72% of the Abacus Storage King assets originated from Storage King licenced arrangements.
According to the Investor Briefing pack, the portfolio has a pro-forma earnings (FFO) of $82.6m from net tangible assets of $2,056m, thus generating an FFO yield of 4%. ASK expects to target a distribution payout ratio of 90% to 100% of FFO with the distribution for the first full financial year to 30 June 2024 is forecast to be 6.0 cents per security. Gearing for the REIT will initially sit at 26.8% and is proposed to sit within a band of 25%-35%.
Abacus are seeking to raise $225m under an Offer to be detailed in June. Abacus Group will retain a defensive 19.9% share as a result of exchanging existing loans and assets with equity in ASK and Calculator Australia (Abacus Major Shareholder and related party to Abacus founders) will hold a direct interest in ASK of approximately 40%. The result is that the free float of ASK is likely to be 41% and as the group is unlikely to see significant trading volumes.
In releasing details of the Storage REIT, Abacus also confirmed the sale of non-core commercial asset disposals, the proceeds from which will support the reduced gearing levels in Abacus and ASK post de-stapling. The three non -core asset sales were 33 Queen Street, Brisbane QLD, 247 Adelaide Street, Brisbane, QLD and 187 Todd Road, Port Melbourne VIC. The properties were sold a total consideration of approximately $97.9m.
Abacus’ Managing Director, Steven Sewell, commented “These asset sales reflect Abacus’ ability to identify opportunities to optimise its investment portfolio and transact in a market environment challenged by relatively low transaction volumes in the Office sector.”
Abacus intends to provide securityholders with a Transaction Booklet ahead of an Extraordinary General Meeting (‘EGM’) to vote on the de-stapling proposal in July 2023. A decision to proceed with the proposed de-stapling and equity raising remains subject to market conditions, the approval of the Abacus Board, an Independent Expert opinion that the de-stapling is fair and reasonable to Abacus securityholders, a securityholder vote at the EGM, and the receipt of regulatory and any required third party approvals.
Related Articles
