By Brad Hadfield

ll eyes in the self-storage industry are on Australia right now as a $1.9 billion takeover offer sits on the boardroom table at Abacus Storage King (ASK), one of the largest self-storage owners in Australia and New Zealand with approximately 126 operating properties, 21 development sites, and 75 licensed/managed properties.

The offer comes from U.S.-based behemoth Public Storage and South African billionaire Nathan “Natie” Kirsh of the Ki Corporation, which has a nearly 60 percent stake in ASK. Despite that majority share, the company cannot make the call alone—a scheme of arrangement, which is a legal mechanism used for making significant changes to a company’s structure, requires at least 75 percent by value of those voting and a majority in number of each class.

The move isn’t all that surprising; Public Storage (PSA) has been expanding internationally for years (the REIT acquired Shurgard Self Storage in Europe in 2006 for $5.5 billion) and has been keen on Australia for some time. Public Storage had made a $1.9 billion bid to acquire National Storage REIT in Australia in February 2020, but the REIT ultimately withdrew it. “It was right when COVID hit, and no one knew what was going to happen,” says a source close to Public Storage. “They decided not to proceed, but they’ve continued exploring their options there.”

The timing was right now, says the source, especially with Kirsh onboard. “The Ki Corporation hasn’t been satisfied with ASK’s performance for a couple years, and Public Storage wants in the market. Separately they’re powerful, but together, that’s a win-win. This is just a really mutually beneficial opportunity for them.”

It’s not yet apparent if this will be the deal to get Public Storage into the Australian market, as the offer is not being judged too favorably. Analysts for various commercial real estate outlets say it is a low-ball offer, about eight percent below the value of ASK’s net tangible assets. Ben Brayshaw, an analyst for Australian investment firm Barrenjoey, thinks the offer needs to bump up from $1.49 to $1.52. “This assumes a higher probability that Ki Corp and PSA pay net tangible assets of $1.60 for ASK, an 8.8 percent increase on the non-binding offer of $1.47 and a 37.9 percent increase on the undisturbed price.”

Others within the industry stop short of calling the offer cheap, noting that ASK has been struggling a bit since spinning off from the Abacus Group in 2023 to be a standalone, publicly traded company. “The ASK share price seems to have underperformed since they listed in 2023,” Sam Kennard, CEO of Kennards Self Storage, told MSM. Kennards is a privately owned family business and one of the top three operators in the country. “Analysts have attributed this to the dominant shareholdings of Abacus and Kirsch, whose [shares] might be close to 60 percent.”

It’s the same argument Joe Russell, president and CEO of PSA, and Sir Bradley Fried, CEO of Ki Corporation, made in the Non-Binding Initial Offer (NBIO).

“Since the de-stapling in August 2023, ASK has significantly underperformed its peers and relevant benchmark indices, has fallen out of the S&P ASX 200, and has had limited access to competitive equity capital,” wrote the duo.

The NBIO goes on to cite structural impediments from its lack of scale, funding constraints, limited free float and ownership structure, and more. “Due to these issues, [we] believe that the value of ASK’s business will deteriorate relative to competitors, to the detriment of all securityholders,” Russell and Fried conclude.

Public Storage further stated that the offer would bring “certainty, liquidity, and an attractive premium to minority securities.” It added that, like its success with Shurgard Self Storage in Europe, Public Storage would share its expertise and wide-ranging competitive advantages to help enhance Abacus Storage King’s customer experience, operating performance, ancillary businesses, and portfolio growth.

The source close to Public Storage says that the company feels the offer is sound. “The initial offer is just that—an initial offer. But it’s a fully funded, all cash deal. Now, after some due diligence is done, maybe there’s some wiggle room. But Public Storage views it as a solid, competitive offer, and they know they can improve things like they did with Shurgard. Integrating their technology may even be an option.”

In a surprise move two weeks ago, Australia’s National Storage REIT (NSR), also one of the country’s top three self-storage companies, purchased 4.8 percent in the register of its rival. NSR says it doesn’t intend to make a competing proposal for ASK, although it said it was a “compelling investment” at the current “below-value price.” Analysts say the move could be an attempt to block a takeover transaction, with NSR using its newfound shareholder status to nix any dealmaking, possibly even increasing its stake to 10 percent to increase its voting right to around 25 percent. “This is not unrealistic, as NSR could arguably be incentivized to block PSA from setting up in AU as a key competitor,” says Brayshaw.

“The NSR’s recent investment in ASK will likely frustrate [PSA’s] plans, but I am not sure how it will play out,” says Kennard. “This is a complication, and I am not sure if PSA and Ki anticipated something like that would happen.”

The Public Storage source views NSRs move with skepticism. “It feels like they’re behaving in an anti-competitive manner. They may say they’re not, but it’s a bit odd that they acquired shares when they did, don’t you think?”

The Australian Financial Review believes that bankers are “hoping to shake out rival bidders.” It says a logical bidder would be PSA competitor Extra Space Storage, however they do not appear to have made any moves. When contacted, Joe Margolis, CEO of Extra Space, simply said he preferred not to comment on matters his company was not involved in.

At the moment, the NBIO is being analyzed and pored through with a fine-tooth comb, says our source. PSA did address the situation itself on its Q1 2025 earnings report call and detailed the deal in their subsequent report. The company wrote, “The transaction is subject to a number of conditions, including due diligence, negotiation of a definitive agreement, and legal, regulatory, and shareholder approvals. Australia and New Zealand have an established and growing self-storage market that benefits from outsized population inflows, strong economic growth, and rising adoption by consumers.”

Kennard has a few words of wisdom for the U.S.-based brand. “It’s worth remembering that despite its huge land area, Australia has a population of only about 26 million people, which is about the same as Southern California,” he says. “The pace of growth in new supply is constrained for this reason. Investment expectations should reflect this.”

It’s something to think about, and right now, it seems that there is a lot of that going on.