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Abacus Continues Self Storage Spree

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The ASX-listed property investor Abacus has continued its focus on the office and self storage sector as its main engines of growth, striking a deal to buy five more self-storage properties for $57 million.

Abacus Property Group, which is already one of the biggest players in Australia’s self storage market, has structured its business around investment in the office and self storage markets and is looking to divest over time while exercising caution over residential and retail investments.

The group has bought four purpose-built Storage King facilities in Perth and Auckland, New Zealand, and one self-storage development site in Sydney which will accommodate a multi-level facility.

▲ Former Federation Centres chief executive Steven Sewell now heads up Abacus Property Group.
▲ Former Federation Centres chief executive Steven Sewell now heads up Abacus Property Group.


The assets will add to deal-hungry Abacus' $908 million self-storage portfolio of 70 assets complemented by a strategic 25 per cent stake in Storage King last financial year.

Last month, Abacus acquired a 4.6 per cent stealth stake in rival ASX-listed real estate investment trust National Storage REIT. National Storage is the largest self-storage provider with a near $2 billion empire.

The National Storage REIT stake is believed to be held separately.

Abacus, led by managing director Steven Sewell, has “rigorously stuck to” its diversified strategy moving towards an annuity-style business.

“Our transition to a strong asset-backed, annuity style business model continues to progress well,” Sewell said.

“We will focus on investments of office and self storage that gives up a clear path to income growth.”

While Abacus has ridden out the worst of the residential cycle, it has also sold down some sites and there are expectations it could spin off the remainder of this operation as it focuses on institutional real estate.

Abacus said settlement on the collection of self storage facilities was anticipated by calendar year end.

Commercial aquisitions offset residential slump

For the year, Abacus reported a fall in funds from operations. Revenue fell 15 per cent to $388 million while its net profit came down 21 per cent to $194 million.

The group's weakened residential devision delivered a gross margin of $51.8 million against $85.6 million last year as the group continued to offload interests in more projects.

Abacus' portfolio of 34 assets — mainly offices — had a revaluation gain of $18.2 million and is on track to deliver a 4.8 per cent growth in rental income in the coming year.

Abacus' storage portfolio which hit $908 million during the year after an acquisition of eight assets achieved a gross margin of $100 million, a 3 per cent increase to last year's results.

Despite lower earnings figures, the Abacus distribution per security climbed 2.8 per cent. The final distribution was 9.25¢, taking the full year to 18.5¢.

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Article originally posted at: https://theurbandeveloper.com/articles/abacus