Why this ASX REIT is quietly pushing back toward its takeover price

Investors push National Storage higher as the final takeover steps come into view.

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The National Storage REIT (ASX: NSR) share price is edging higher in Tuesday's mid-afternoon trade.

That adds to what has already been a strong 12-month run for the company.

Shares in the storage giant are up 0.54% to $2.785 at the time of writing, leaving the stock up about 28% over the past year.

That keeps it trading just below the $2.86 per security takeover price proposed by the Brookfield and GIC-backed consortium back in December.

Today's move suggests investors are growing more confident that the gap to the offer price may continue to close.

Two businessmen shake hands behind a window.

Image source: Getty Images

Foreign approvals tick another box

In a statement to the ASX, National Storage confirmed that the required FIRB and New Zealand overseas investment approvals for the proposed acquisition have now been secured.

That now removes two of the key regulatory hurdles tied to the all-cash $2.86 per stapled security offer from the Brookfield and GIC consortium.

The company said all foreign competition approvals and clearances have now also been received.

The remaining steps are the final scheme approvals, including securityholder backing at next week's meeting and subsequent court approval.

With most of the regulatory work now complete, investors will be looking ahead to the vote as the next step before the deal can be finalised.

Why buyers are staying disciplined

The modest lift in the share price makes sense given that most of the takeover premium was already captured when the binding offer was announced.

At $2.78, the stock is trading at only a small discount to the scheme consideration, showing investors largely expect the deal to proceed while still leaving a small margin for timing risk.

And that discount may continue to narrow as the 15 April securityholder vote approaches.

The board has unanimously recommended the scheme, with directors saying they intend to vote their own holdings in favour unless a superior proposal emerges.

The business itself still stacks up

While takeover progress is driving short-term trading, National Storage's underlying business has also remained solid.

The REIT remains Australia and New Zealand's largest self-storage operator, with more than 290 locations and over 100,000 customers.

Its latest interim distribution of 6 cents per security also keeps the trailing yield above 4%, which has helped support investor interest even as the stock trades near the deal value.

Unless an unexpected obstacle emerges, the next major catalyst looks set to be the scheme meeting result and final court timetable.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Brookfield and Brookfield Corporation. 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 Scott Phillips.

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