'Stuff' keeps the business booming

Unlike other commercial property, self-storage units are proving a solid investment

- Pam Walkley

Self-storage is one sector of the commercial property market that’s booming. A downside is that retail investors who want to jump on the self-storage bandwagon have limited options, but a new kid on the block will increase their access.

The sector proved to be one of the most resilient industries in Australia during the pandemic. As more people worked from home, many needed to declutter to provide more space and some of this “clutter” was moved into self-storage units.

This came on top of the main driver of self-storage: people moving house. There’s also been an increase in e-commerce businesses that use storage units to house their inventory. All these factors have combined to drive up occupancy and rental rates.

In contrast to the US and UK, where there are multiple listed self-storage options, including exchange traded funds (ETFs), Australian investors have few options. At the time of writing, National Storage (ASX: NSR) is the only public Australian real estate investment trust (REIT), with 200-plus facilities.

But that is about to change: another REIT, Abacus (ABP), kicked off an equity raising in mid-June for the proposed spin-off of its $3 billion portfolio of Storage King self-storage properties. Abacus Group also holds a $1.9 billion office portfolio and a $490 million retail portfolio.

Abacus hopes to raise at least $225 million (through a pro-rata offer to existing shareholders for the self-storage demerger. It has valued the assets for its Storage King REIT (ASK) at $2.6 billion. It’s scheduled to list in August.

As a standalone trust, it will comprise a $3 billion portfolio of 112 trading self-storage facilities and 23 future facilities, and the Storage King operating platform valued at $100 million.