South African billionaire in $1.9b play for Abacus Storage King
South African tycoon Nathan Kirsh has joined forces with New York-listed Public Storage in a takeover offer for Abacus Storage King that values the ASX-listed self-storage operator at around $1.93 billion.
Through his family office Ki Corporation, Kirsh already controls 59.47 per cent of the register of Abacus Storage King – known by its ticker as ASK. That stake is both directly and indirectly, through Kirsh’s substantial interest in Abacus Group, which manages ASK and retains a shareholding in it.
Abacus spun off the self-storage operator into a separate ASX-listed operator two years ago, accompanied by a capital raising. It owns close to 150 storage facilities and development sites, spread across the Australian mainland and New Zealand, in a $3 billion portfolio.
But the Kirsh-led consortium said the purpose of that spin-off – to unlock value, improve access to capital and fast-track the development pipeline – had not been achieved and nor was it likely to be achieved under the current structure.
The consortium offer is all cash at $1.47 per security, a 26.7 per cent premium to its last closing price. The offer effectively means the consortium is putting up around $783 million to buy out the minority interests in ASK.
“As a significant and long-term security holder, we have remained an active supporter and partner to Abacus Storage King and its success,” Ki Corporation chief executive Sir Bradley Fried said in a statement.
“However, the entity has continued to underperform relative to peers and the broader market since listing. The demerger of 2023 has failed to deliver the promised value for security holders and the entity’s security price has declined 18 per cent since then.”
That has resulted in a negative annualised total security holder return of 7 per cent, in “stark contrast” to its ASX-listed peer group of real estate investment trusts, which have achieved an 11 per cent gain.
“With a free float of just 39 per cent, the entity faces structural impediments which not only inhibit its ability to grow but may cause further deterioration.”
Fried said the consortium offer would give security holders “a meaningful opportunity to immediately crystallise value on implementation of our proposal in turn creating a more viable path forward for the employees, customers and operations of Abacus Storage King.”
Nathan or “Natie” Kirsh is a native of Eswatini – known as Swaziland until 2018 – and has a global portfolio of retail and property interests through his Kirsh Group, including a majority stake in New York state cash and carry operation Jetro Holdings, which is the owner of Restaurant Depot and Jetro Cash & Carry. It has investments in places ranging from Australia and Eswatini to the UK, the US, and Israel.
Kirsh is a long-time stakeholder in the parent group, listed fund manager Abacus, with a stake of around 50 per cent.
Public Storage has shown interest in Australia’s self-storage sector previously, launching a bid to buy another locally listed player, National Storage REIT, five years ago. That bid ultimately flopped when Public Storage, one of the world’s biggest operators, walked away from the bid during a period of market volatility.
The Kirsh-led consortium offer for ASK is still indicative and non-binding. The consortium would need to complete due diligence, as well as gain a unanimous recommendation from ASK’s board along with foreign investment approval.
A private ruling would also be needed from the Tax Office to confirm treatment of the property trust’s earnings. The consortium has proposed that management of the ASK portfolio be taken in-house from its Abacus parent.
The offer is also at roughly an 8 per cent discount to the net tangible asset value of ASK’s portfolio, which was reported as $1.60 per security at its interim results in February.
