National Storage REIT has partnered with GIC to invest $228 million in a second tranche of self-storage development assets, reaffirming its FY25 earnings guidance and strategic growth plans.
- Second tranche involves six new self-storage assets
- Total capital deployment of approximately $228 million
- NSR to receive around $140 million in net sale proceeds for debt repayment
- NSR maintains 25% equity stake and management role in the Fund
- FY25 underlying earnings per security guidance reaffirmed at minimum 11.8 cps
Strategic Expansion Through Tranche 2
National Storage REIT (NSR) has announced a significant step forward in its growth strategy by entering binding agreements with global investment firm GIC to fund a second tranche of development assets under the National Storage Ventures Fund. This tranche will see the acquisition, development, and operation of six additional self-storage centres drawn from NSR's existing development pipeline, with a capital commitment of approximately $228 million.
The move builds on the foundation laid in June 2024 when the Fund was established and the initial tranche of ten storage projects was settled in October 2024. NSR and GIC continue to hold equity interests of roughly 25% and 75% respectively, reinforcing their ongoing partnership in expanding Australia's largest self-storage network.
Financial and Operational Implications
The acquisition of these new assets is contingent on several conditions, including finalising business and property sale agreements, securing regulatory approvals such as FIRB clearance, and completing external financing arrangements. Settlement is targeted for mid-June 2025, subject to mutual agreement.
NSR expects to realise net sale proceeds of approximately $140 million from this transaction, which will be directed towards debt reduction. This capital recycling strategy underscores NSR's disciplined approach to balance sheet management while continuing to fuel growth through the Fund.
Importantly, NSR will maintain its role as manager of the Fund, responsible for identifying, acquiring, and developing assets within the portfolio. The company will earn fees for these services, which are conducted independently of its own development activities funded through its balance sheet. This dual approach allows NSR to leverage its in-house expertise while managing risk and capital efficiently.
Outlook and Market Position
NSR has reaffirmed its underlying earnings per security guidance for the fiscal year 2025 at a minimum of 11.8 cents per security, assuming stable market conditions. The REIT also reiterated its commitment to distributing between 90% and 100% of underlying earnings, maintaining its appeal to income-focused investors.
As the largest self-storage provider in Australia and New Zealand, with over 260 locations and more than 97,000 customers, NSR's continued expansion through the Ventures Fund signals confidence in the sector's growth potential. The partnership with GIC not only brings substantial capital but also aligns with NSR's strategy to scale its footprint while managing capital intensity.
Bottom Line?
NSR’s strategic partnership with GIC and disciplined capital deployment set the stage for sustained growth and balance sheet strength in a competitive self-storage market.
Questions in the middle?
- Will regulatory approvals and financing arrangements proceed smoothly to meet the mid-June settlement target?
- How will the new tranche impact NSR’s overall development pipeline and future capital allocation?
- What are the potential risks if market conditions shift, affecting NSR’s reaffirmed earnings guidance?