NATIONAL STORAGE REIT LAUNCHES $260M EQUITY RAISE
Written on the 28 June 2016
NATIONAL Storage REIT (ASX:NSR) plans to raise $260 million to take control of Southern Cross Storage Group from joint venture partner Heitman.
The self-storage provider will pay a net consideration of $285 million to the US real estate investment firm for the network of 26 facilities across Australia.
Heitman owns 90 per cent equity in Southern Cross under the terms of the joint venture which was established in 2011.
The Brisbane-based company will fund the acquisition using an expanded debt facility and equity raising, including a $101 million institutional placement and $159 million three-for-one entitlement offer at $1.58 per share.
The offer price represents an 8.7 per cent discount on the company's closing price of $1.78 yesterday, with a trading halt in place until Thursday.
The capital will also be used to acquire three additional centres in Perth and one in Cairns for $16.1 million.
NSR managing director Andrew Catsoulis says the acquisition of the Southern Cross portfolio will be transformational for the group.
"This acquisition reinforces our position in the Australian and New Zealand self-storage market by securing long-term ownership of strategically important assets," Catsoulis says.
"These assets are highly complementary to our existing property portfolio and are already fully integrated into our platform.
"In addition to the value derived from our deep knowledge of the Southern Cross portfolio assets, there is potential to unlock further value as these centres continue to mature, with additional upside potential from further expansion, development or redevelopment of some assets."
NSR's footprint will increase to 56,000 storage units nationally following the transactions, capping off more than $140 million worth of acquisitions completed over the past 12 months.
"We continue to maintain a strong pipeline of potential acquisitions, with approximately $100 million of assets currently under consideration and advanced negotiations underway for approximately a further $30 million of assets," Catsoulis says.
The announced acquisitions are expected to be earnings accretive in FY17.
The company has reaffirmed earnings to be between 8.7 and 8.8 cents per security in FY16.
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