Abacus’s stake lift adds up to takeover play for National Storage

Expectations are mounting that Abacus Property Group will make a takeover play for the $1.92bn National Storage REIT after the company lifted its stake in its rival this week.

The acquisition of shares takes Abacus’s interest in National Storage to 8.06 per cent, from 7.06 per cent.

Many believe the timing of research released on Abacus this week by Macquarie analysts was interesting, given that Abacus has counted Macquarie Capital as its adviser when it comes to buying up stock in the company that has previously been a takeover target for various offshore groups, including Gaw Capital, Warburg Pincus and US-based Public Storage.

It had been thought Abacus bought shares in its competitor to get a seat at the table, but now it is thought a takeover is more likely on its agenda.

Market experts believe the group will either make a play for the group with help from a capital partner or sell down assets to carrying out a cash transaction on its own.

It is also worth remembering that Abacus raised more equity than was needed for its acquisition of the Australian Office Fund last year that did not eventuate, securing $250m to pursue the business in conjunction with Charter Hall.

A scrip deal is seen as unlikely because National Storage is trading at a premium of about 30 per cent to its own stock and Abacus is trading at a discount of about 20 per cent to its net tangible assets.

Steven Sewell is said to be eager to make his mark as the chief executive of Abacus after about two years in the top job, and he has growth ambitions.

The first obstacle will be gaining support from Nathan Kirsch, who owns about 50 per cent of Abacus, and then the challenge will be paying a high enough price, as any pursuit is likely to face competition.

If a transaction does not come off, Abacus would still come out on top, given National Storage shares continue to gain ground.

Macquarie analysts said in research released this week that there was a strategic advantage in consolidating the self-storage sector for Abacus with its first rights to acquire the non-Abacus owned self-storage assets under Storage King management.

Abacus now has a portfolio comprising 54 per cent office assets and 37 per cent self-storage.