National Storage FVE Increases on Takeover Fight, but Security Fully Valued

Our fair value estimate of no-moat National Storage REIT increases to AUD 2.32 per security from AUD 2.00 following another takeover proposal of the REIT, this time by giant United States-listed self-storage operator Public Storage (NYSE: PSA). Public Storage has made an indicative nonbinding offer to acquire National Storage REIT for a cash price of AUD 2.40 per security. Our fair value estimate reflects a 75% probability that National Storage will be acquired at this new offer price, and a 25% probability that the deal is not completed, which would lead us to revert to our unchanged stand-alone fair value estimate of AUD 1.77. Public Storage’s proposal follows Gaw Capital Partners nonbinding proposal to acquire National Storage, announced to the market on Jan. 23, 2020. Gaw’s proposed acquisition price was not disclosed, but National Storage Board indicate Public Storage’s proposal is superior and have granted Public Storage access to perform due diligence over its portfolio of self-storage assets.