Fresh from $4bn buyout, Brookfield and GIC target rival Abacus Storage King

Abacus Storage King could be next in the sights of Brookfield and GIC.

After finalising a $4bn buyout for National Storage REIT, Brookfield and GIC could already be turning their attention to their next sector opportunity.

Speculation suggests the North American private equity firm and the Singapore sovereign wealth fund have informally engaged with NSR’s rival, the $1.94bn Abacus Storage King, about a potential future buyout of that business.

Any deal is not expected to be imminent, as it would take some time to bed down the latest acquisition, but it could be on the horizon for the near term.

Abacus Storage King may want a 15 per cent premium to its net tangible assets of $1.74, taking the transaction size to $2.63bn or $2.26 per share.

Shares closed at $1.49.

But others believe a deal could still get done at a lower number.

GIC and Brookfield offered NSR $2.86 per stapled security, a 26 per cent premium to its undisturbed November 25 closing share price and 10.9 per cent above its $2.58 NTA.

The Andrew Catsoulis-founded and managed NSR and Abacus Storage King, which is controlled by billionaire Nathan Kirsh, have had their eyes on each other for years.

Disagreements over post-merger governance, management structure and price have likely prevented a deal from happening.

With neutral parties with deep pockets as the new NSR owners, it could pave the way for a transaction.

Major synergies could be delivered from the combination, potentially adding an increase of at least 30 per cent to the operating margin.

Citi and JPMorgan advised NSR and Deutsche Bank and Jefferies the bidders.

Public Storage and the business interests of Nathan Kirsh, Ki Corp, recently attempted a full takeover for Abacus Storage King, offering $2.3bn but then Public Storage subsequently withdrew.

Now Abacus Storage King, run by the listed Abacus Group, is considering internalising its management.

Sources believe GIC and Brookfield will retain NSR’s 10 per cent in Abacus Storage King as a strategic foothold for a deal down the track.

Storage assets have been seen as one of the more resilient asset classes in a downturn for the real estate sector, with low operating costs and strong profit margins.

National Storage is Australasia’s largest self-storage provider, with more than 270 storage centres across Australia and New Zealand, and Macquarie Capital-advised Abacus Storage King has about 150 storage assets on its balance sheet.