This article is from the Australian Property Journal archive
ABACUS Property Group has reaffirmed its confidence in the self storage sector by acquiring the remaining 75% interest in Storage King.
The self storage operating platform had been a privately owned and operated management platform until Abacus acquired a 25% interest in August of 2018. Storage King manages more than 170 stores located in Australia and New Zealand, with more than 55,000 customers on behalf of abacus and a number of third-party owners.
Abacus first invested in the sector in 2005 and as of June of 2020 has accumulated a portfolio of 81 locations with the value of more than $1 billion, all managed by Storage King.
“The acquisition of the Storage King operating platform was identified as a key strategic imperative for Abacus, given our ownership of Self Storage assets exceeds $1.2 billion and comprises 40% of our Balance Sheet. A more integrated management business is critical to driving our Self Storage business and enhancing associated asset returns,” said Steven Sewell, managing director at Abacus.
The CEO of Storage King, Michael Tate, will join the Abacus executive leadership team, with his role unchanged as part of the transaction.
“Abacus believes that in conjunction with Michael Tate, given his track record, market credibility, passion and energy for the business, it has the potential to continue to invest actively and substantially into driving the operations, technological advancement and customer value proposition,” continued Sewell.
Consideration of $50 million is being made for the balance of Storage King, with completion expected to occur in late November 2020 and funded by existing debt facilities.
Abacus states that while their self storage portfolio faced declines during the peak of COVID-19, occupancy has rebounded.
Established portfolio occupancy levels increased to 89.7% at 30 September 2020, excluding Victoria where levels remain flat due to second wave lockdowns.
Overall rental yield has returned to pre-pandemic levels, with established portfolio RevPAM at $251psm with average rent at $283psm as of 30 September, both showing increases from June figures.
Abacus has also announced additional contracts for the acquisition of four self storage properties for $45.1 million (excluding transaction costs), with settlement of three existing facilities expected by the end of 2020.
Further, Abacus has exchanged transactions in Perth, Sydney and Melbourne totalling $45.2 million which have yet to be settled as of June of this year.
