Warburg Pincus Bidding Against Gaw for A$1.73B Aussie Self-Storage REIT

Warburg Pincus has entered a bidding contest for Australia’s largest self-storage operator with an offer to buy National Storage REIT (NSR) for A$1.73 billion ($1.2 billion), according to a disclosure by the real estate investment trust.

The board of the ASX-listed vehicle, which owns and operates 168 storage facilities across Australia and New Zealand, said in its filing to the stock exchange that the New York-based private equity firm had confidentially made an unsolicited, non-binding offer for the REIT equivalent to A$2.20 per stapled security.

“Given the repeated press speculation regarding Warburg Pincus’ interest the NSR board has determined to disclose its indicative proposal,” the trust’s leadership said in a statement posted to the Australian stock exchange’s website, adding that the offer was received prior to the receipt of a separate proposal by NYSE-listed Public Storage.

Warburg Pincus is currently conducting non-exclusive due diligence and is discussing the terms of the proposal with the management of National Storage and its advisors, according to the statement.

A representative of Warburg Pincus declined to comment when reached by Mingtiandi.

Going Up Against Gaw

Warburg Pincus is joining the bidding war three weeks after National Storage’s board confirmed that Gaw Capital Partners had offered to buy out the trust for an identical A$2.20 per stapled security.

In this latest statement, the storage REIT’s board confirmed that it is continuing to discuss that earlier proposal with the Hong Kong-based fund manager, which is similarly conducting non-exclusive due diligence.

The bid by Goodwin Gaw and his team at Gaw Capital Partners came just a month after the Hong Kong heavyweight closed on $2.2 billion in equity for its Gateway Real Estate Fund VI, with investors kicking in another $800 million in sidecar commitments.

Bidding Heats Up

The offer from Warburg Pincus was revealed just four days after the REIT’s board had disclosed that Public Storage, which is the largest self-storage provider in North America, had made an A$1.9 billion offer for National Storage equivalent to A$2.40 per stapled security.

In its announcement today, the Aussie REIT’s board said that it is discussing all three proposals with the relevant parties, while cautioning that discussions are at a preliminary stage with no certainty that they will lead to a final recommended offer.

“The board of NSR is committed to acting in the best interests of, and maximising value for, NSR securityholders,” the board of the REIT noted.

The listed trust’s market capitalisation has risen to A$1.9 billion this month after its unit price climbed more than 18 percent since 1 February to close at A$2.40 on Monday.

Closing on $19B in Fund Commitments

Warburg Pincus is proposing to buy out the REIT after hauling in a combined $19.05 billion in fund commitments for a pair of funds that closed within the past eighteen months.

The private equity giant reached a final close of $4.25 billion on its China and Southeast Asia private equity fund Warburg Pincus China-Southeast Asia II last July, just five months after the firm began gathering commitments for the strategy with an initial target of $3.5 billion.

In late 2018, the firm made a $14.8 billion close on Warburg Pincus Global Growth, a global growth-focused private equity fund.

The New York-based firm has indicated that the pair of funds will jointly invest in real estate, healthcare, financial services, and telecommunications opportunities.

Taking Another Angle on Industrial Space

Warburg Pincus is pursuing the self-storage opportunity in Australia after building up a track record in industrial real estate ventures across the Asia Pacific region.

Just last month, Warburg Pincus-backed industrial developer New Ease formed a joint venture with with fund manager Actis to invest an initial $200 million to develop a trio of mainland China logistics projects.

The firm’s big logistics bet, ESR, raised HK$12.6 billion ($1.6 billion) last October in its second attempt to list on the Hong Kong stock exchange.