Private equity giants Blackstone and Warburg Pincus are understood to have offered to take a stake in National Storage REIT to provide some fresh funding for the company ahead of its move to tap the market for $330m.
The private equity firms were both suitors of National Storage REIT before it neared a deal with the US-based Public Storage this year to buy the business for $2.40 a share, or $1.9bn.
It is understood National Storage was against the move by the funds to take an interest because they would be securing the stakes at opportunistic prices. Their stakes would also prevent a competitive auction for the business that could emerge when conditions return to normal, with other groups that may want to buy National Storage less keen to compete if a major holder is on the register.
Public Storage withdrew its bid for National Storage REIT due to the pandemic, but it might return to the table at a later stage.
National Storage REIT’s market value is now $1.34bn.
On Tuesday, it announced it would raise $300m through a placement and $30m through a share purchase plan, with JPMorgan and Citi working on the transaction. The shares were sold at $1.57, a 7.1 per cent discount to their last closing price of $1.69, and a book message sent to investors in the afternoon said the deal had been covered.
National Storage said the funds were due to be used to strengthen its balance sheet. But some believe the money will enable the group to buy up more storage facilities from smaller investors to build scale, which would have been the strategy for the group under the ownership of Public Storage.
Local listed rival Abacus Property is not a seller of its storage assets and has bought a small stake in National Storage, giving it a seat at the table in any negotiations. Earlier, it planned to partner with Gaw Capital Partners for a tilt at National Storage, where it would manage the assets and split the returns, but the deal never eventuated and Gaw bid $2.20 a share for the company on it own.
Charter Hall Social Infrastructure REIT raised $115m in recent days, while retirement village operator Ingenia raised $175m. Other real estate groups that have tapped the market are Lendlease, Shopping Centres Australasia and Charter Hall Retail REIT.
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