Abacus Property Group has increased its commitment to self-storage, spending $160 million on five assets in Sydney.
The five properties—in Chatswood, Artarmon, St Leonards, Dee Why, and Pymble—are managed by Storage King and provide a combined 25,000sq m of net lettable area.
More than 40 per cent of Abacus’ $3.6 billion in total assets is now in self-storage facilities. Its core exposure, office property, remains slightly ahead.
Abacus has shifted quickly from a value-add strategy to an annuity, rent-collecting strategy.
The remainder of its property portfolio is retail and industrial with a small proportion of non-core assets which, it says, are being progressively reduced.
Abacus Property Group managing director Steven Sewell said the transaction demonstrated the sustained acquisition pipeline generated from the Storage King platform and would be funded from existing debt facilities.
“The assets are within tightly held catchments, benefitting from significant self storage demand that is generated by above-average household incomes, large proportions of renters and an increasing density from apartment development,” Sewell said.
“This transaction aligns with our strong asset backed, annuity style business model where capital is directed towards assets in key sectors that provide potential for enhanced income growth and ultimately create value.”
The $3.3-billion real estate investment trust is, under chief executive Steven Sewell, being reshaped as a pure-play office and self-storage landlord.
In November, 2020, Abacus paid $50 million to acquire 75 per cent of Storage King after securing its initial 25 per cent stake in August 2018 for an undisclosed amount.
Storage King, founded in 1998 by Sydney businessmen Michael Tate and David Scanlen, manages more than 170 self-storage locations, serving more than 50,000 customers.
The self-storage sector has been lifted in recent months by the housing recovery and broader economic rebound as well as the demand for e-commerce.
The sector remains a highly fragmented market with the two biggest players—National Storage REIT and the privately owned Kennards—each holding more than 10 per cent of the total market.
Earlier this month, Abacus, alongside Charter Hall, secured a majority interest in Myer Melbourne, for $270.4 million.
Abacus has also recently listed a commercial asset at 444 Queen Street in Brisbane.
The building, held jointly with the Public Trustee of Queensland, was acquired for $23.5 million in 2016 and is expected to earn the partners $60 million.