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Why the National Storage share price crashed 19% lower today

The National Storage REIT (ASX: NSR) share price has been one of the worst performers on the S&P/ASX 200 Index (ASX: XJO) on Wednesday.

The self-storage operator’s shares were down 19% to $1.46 before being hurried into a trading halt.

Why is the National Storage share price in a trading halt?

Just after lunch the company requested a trading halt pending an announcement in relation to media speculation.

The media speculation in question is an article from the AFR which claims that the current market volatility has claimed another potential M&A deal.

According to the report, the media outlet understands that Public Storage has walked away from a deal for National Storage after being unable to firm up its $2.40 a share proposal due to current market conditions.

This follows the withdrawing of offers from both Warburg Pincus and Gaw Capital Partners around three weeks ago. Warburg Pincus and Gaw Capital Partners had both tabled conditional offers of $2.20 per share.

What now?

At this stage this is still speculation and the company has not yet updated the market. But given the current market conditions, I wouldn’t be surprised if this were the case.

Perhaps the biggest surprise is the extent of the selling this morning.

On Tuesday National Storage’s shares closed the day at $1.80, which was a sizeable 25% discount to Public Storage’s offer. I feel this indicates that there was already a large degree of scepticism regarding this deal.

Though, one positive from this share price decline is that the yield on offer with its shares is now extremely generous.

Based on its trailing 12 months distributions of 9.8 cents per share, National Storage currently offers a sizeable 6.7% distribution yield.

This is larger than those on offer with dividend favourites such as Telstra Corporation Ltd (ASX: TLS) and Transurban Group (ASX: TCL).

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited and Transurban Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.