Abacus / Storage King split – which bit is the most valuable?

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Question asked 15/07/2023

Abacus / Storage King split – which bit is the most valuable?

Hi I currently hold ABP shares (based on MM's analysis & opinion and doing quite nicely thank you) and have received details about the proposal to spin off the Storage King assets as a separate entity. If we assume that it goes ahead then current ABP holders will receive the same number of shares in ASK as they hold in Abacus (although you can apply for additional ASK shares) Which of the two new separate entities do you think would have the most value after the spin-off - Storage King or the office/retail assets that would be left in Abacus? Would you continue to hold on to both? Cheers, Carl

Answer

Hi Carl

After the spin out, Storage King will be the bigger business with a post raise market capitalization of ~$1.8bn (currently their combined market cap is $2.4bn) however they are also raising funds as you say.

Post implementation of the De-stapling, ASK will own, operate and manage a $3.0 billion Self Storage portfolio comprising 131 assets including 110 trading stores with over 582,861 sqm of net lettable area, 21 future stores and other Self Storage investment.

Abacus Group though, will retain a strategic stake of up to 19.9% in ASK, making Abacus their largest shareholder.

We like the move and think it will create more value than is currently being ascribed to ABP, from there it will depend on relative pricing whether or not we would hold. Relative to NSR, which we think is a better business, ASK should trade on a slightly reduced valuation. Overall, we’re now getting interested in NSR around $2.20 given it’s been dragged down by this transaction, and is a great operator with great assets.

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Abacus Property Group (ABP)

LAST UPDATED 14/07/2023 14:40

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