National Storage Trust is looking for further seven acquisitions valued at $35 million.
The potential purchases come just five months (Aug 2004) since the Trust last raised capital to buy five storage centres worth $25 million and reflects the Trust’s continuing belief in the opportunities afforded by the self storage industry.
APN National Storage Fund Manager Mr Paul Noonan said the unlisted trust is looking to secure self storage operations in major regional and metropolitan locations.
Mr Noonan said a capital raising had been slated for the first half of 2005, with up to seven new properties under consideration worth a total of $35 million.
“After being under bidder on the $215 million Millers Self Storage portfolio in October we are pursuing growth through a number of strategic of acquisitions.
With 90% of the storage industry run by independent operators APN Funds Management, and its tenant National Storage Operations, see ample opportunity to growth the Trust organically.
One of the options for the Trust in the future is a listing it on the ASX which could occur once the total asset value of the Trust reaches around $300 million. Funds under management are currently $150 million with acquisitions in the next 6-12 months expected to see total assets beyond $200 million by the end of 2005.
Mr Noonan said one of the major strengths of the Fund was the symbiotic relationship between APN Funds Management and the tenant National Storage.
The Queensland based National Storage, that gave the Fund its name, leases all 24 properties in the Trust and also sources new acquisitions exclusively on behalf of the Trust.
National Storage currently has more than 12,000 corporate and private customers providing the Trust with income of more than $10 million a year via its rental payments. The properties have an average occupancy of 75%-80%, with considerable potential for future growth via additional construction of units at existing centres as well as through increasing occupancies as its more immature locations.
Mr Noonan said under the tenancy agreement National provided the Trust with storage buildings that it leased for 15 years at a yield of 9%-10%.
National uses its considerable experience and expertise as one of Australia’s leading self storage business operators to manage the properties and deliver income growth to the Trust.
Mr Noonan said geographical diversification was critical to the Trust with properties currently located in Melbourne (50% portfolio), Adelaide (17%) and Brisbane (33%).
“We see the self storage market as having significant growth opportunities with provision of storage space in Australia on a per capita basis currently well behind that of Canada and significantly below the USA where it is a mature business,” he said.
Mr Noonan said people downsizing their houses, a trend to apartments and units and the emergence of the corporate self storage market were driving the self storage market.
The APN National Storage Trust owns more than 100,000 sqm of storage facilities in 25 locations in Melbourne, Adelaide and Brisbane and is the industry pioneer in the Trust arena, and National Storage is the second largest operator in the industry.
It is currently yielding 9% which is expected to grow to 9.4% by 2006 and is attractive to investors looking for a direct, long term property income stream
