Bidding war breaks out for National Storage REIT

A rival takeover proposal has lobbed for National Storage REIT, which controls a near $2bn empire across Australasia.

National Storage Managing Director Andrew Catsoulis. Picture: Steve Pohlner

A takeover war has broken out for the country’s largest self storage owner and operator, National Storage REIT, with US listed giant Public Storage lobbing a bid for the company that controls a near $2bn empire across Australasia.

The proposal from the US group values the company’s equity at $1.9bn, knocking out previous interest from Hong Kong-based private equity group Gaw Capital, that may bounce back with a counter-bid.

National Storage has been on a rapid growth trajectory since listing on the ASX and last year undertook two institutional placements as it raised a total of $358m, helping it grow its overall holdings to $1.95bn.

The company has been pitched as a category leader since listing in 2013 and embarked on expansion by both buying up and developing new sites in Australia and NZ. It grabbed smaller privately held sites and portfolios, introduced efficiencies and took its model around the country.

The Australian’s DataRoom column flagged last month the company was in play and Gaw was revealed to be in talks with target although it did not disclose a price for the Australian company.

Local property companies have traded up on expectations that offshore groups will use cheap debt to swoop on them at this high point of the property cycle as Australian assets are relatively cheap on a global basis.

New asset classes like medical property, such as hospitals and medical centres, and self storage have long been part of commercial property in the US and big players in these markets are happy to expand into Australia.

National Storage, led by chief executive Andrew Catsoulis, said on January 23 it had received the first confidential non-binding indicative proposal from Hong Kong-based Gaw Capital Partners. It said on Thursday that discussions were “ongoing” with Gaw about its indicative proposal.

But Friday’s announcement by the JPMorgan-advised National Storage that it had also received an unsolicited non-binding indicative proposal from New York-listed Public Storage to acquire the stock for a cash of $2.40 per security puts it in the box seat.

The Public Storage indicative proposal was above the Friday’s closing price of $2.26 and is subject to due diligence and winning board support. But it is not subject to a funding condition.

National Storage said it had “commenced discussions” with Public Storage and resolved to grant it due diligence, saying the price offered was superior to Gaw’s indicative proposal.

Public Storage is the world’s largest owner, operator and developer of self-storage facilities. It has nearly 2,500 facilities across the US for more than one million customers. It owns a stake in a Brussels-listed company called Shurgard Self Storage SA that owns storage assets in Europe. It also has an interest US group PS Business Parks, Inc.