Abacus (ASX:ABP) share price dips despite property acquisition

The diversified property group just added five new assets to its portfolio. Here’s the rundown.

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The Abacus Property Group (ASX: ABP) share price is in the red this morning after the company announced the acquisition of self-storage assets in Sydney. At the time of writing, the Abacas share price is trading 0.91% lower at $3.25 apiece. Let’s take a look.

What did Abacus acquire?

Abacus announced that it had exchanged contracts to acquire a portfolio of Storage King self-storage assets located in Sydney.

In its release, the company said the units were located in an area defined by the Australian Bureau of Statistics (ABS) as the “premium inner Sydney Significant Urban Area”.

The acquisition comprises 5 assets, adding more than 25,000 square metres of net lettable area. They include:

  • Three mature stores located in Chatswood, Artarmon and St Leonards
  • One store in the later stage of stabilisation located in Dee Why
  • One recently developed store located in Pymble.

Abacus expects to settle the deal on 3 August 2021 for $160 million, excluding transaction costs. The company plans to fund the acquisition from existing debt facilities.

Management commentary

Abacus managing director Steven Sewell said:

The assets are located within tightly held catchments, benefitting from significant self storage demand generated from above average household incomes, large proportions of renters and continually increasing density from apartment development. The transaction also demonstrates the sustained acquisition pipeline generated from the Storage King platform.

Sewell also commented on what the acquisition brings for its shareholders, saying:

This transaction aligns with our strong asset backed, annuity style business model where capital is directed towards assets in key sectors that provide potential for enhanced income growth and ultimately create value.

Abacus share price snapshot

The Abacus share price is up 13.15% year-to-date, tracking slightly ahead of the S&P/ASX 200 Index (ASX: XJO) year-to-date return of 9.75%.

However, ASX-listed real estate investment trusts (REITs) more broadly speaking, have largely struggled to retest pre-COVID highs.

In the case of Abacus, its shares are still down around 19% from its mid-February 2020 prices of about $4.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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