National Storage strikes $270m tie-up with Singapore’s GIC

The deal shows that big institutions want a piece of the hot self-storage segment of the real estate market.

National Storage REIT is forming a self-storage joint venture with Singapore’s GIC. Picture: Steve Pohlner

The listed National Storage REIT has struck up an alliance with Singaporean sovereign wealth fund GIC that will take the offshore investor into the Australian self-storage market.

The move will see the dominant local player and the offshore group work together in one of the hottest areas of property. It has been bolstered by e-commerce users occupying some centres and also due to the rise of apartment living driving demand for space.

The Singaporean fund has also been selling out of traditional properties like shopping centres, partly as it sees higher returns in areas like storage and logistics real estate.

The new venture, the National Storage Ventures Fund, will develop and run self-storage centres across Australia. It will start by acquiring and developing an initial portfolio of 10 foundation assets sourced from the company’s balance sheet.

The listed group and GIC will hold about 25 per cent and 75 per cent equity interests, respectively, in the venture and the pair plan to pour about $270m of total capital into the venture over the initial 12–18 month period.

It is planned to run for five years and could be extended as the groups have also agreed to work together to identify future development opportunities.

The acquisition of the 10 assets is expected to result in net sale proceeds of about $120m to National Storage, which will be used to repay debt.

The company will manage the venture, and acquire and develop the initial properties and any other self-storage assets that go into the venture. It will earn fees for services provided in a way that complements National Storage’s own ongoing projects.

National Storage managing director Andrew Catsoulis. Picture: Steve Pohlner

National Storage managing director Andrew Catsoulis said the partnership was a “significant opportunity” for the company “to accelerate and diversify its development pipeline and increase operational scale”. It would also keep gearing down and help it to maintain a stable earnings trajectory as it rolls out its own projects.

Citigroup and JPMorgan advised National Storage.

The company reaffirmed its fiscal 2024 underlying earnings per security to be a minimum of 11.3c per security, subject to no material changes in market conditions or the operating environment.

National Storage is already the largest self-storage provider in Australasia with more than 250 locations and more than 90,000 residential and commercial customers.

Self-storage is a hot area and property group Abacus also runs a listed fund in the sector.

Capital partnerships have become an attractive way for real estate groups to raise capital as many of them are trading at a discount. Stockland has struck a series of deals covering areas like land lease and Mirvac also has investment partnerships.

National Storage shares added 3.6 per cent to $2.31 in afternoon trade.