While many ASX-listed companies are raising capital to hunker down during the COVID-19 pandemic, National Storage REIT (ASX: NSR) is bulking up its cash reserves to make acquisitions as they arise.
The storage giant has announced a $300 million institutional placement and a non-underwritten security purchase plan (SPP) to raise a further $30 million.
The proceeds from the $330 million equity raise will be used by NSR to strengthen its balance sheet and give flexibility to make planned and expected acquisitions in the near future.
The company says it has $120 million of acquisition and development opportunities under consideration, but anticipates more will arise as the COVID-19 pandemic continues.
"The self-storage markets in Australia and New Zealand remain highly fragmented and NSR is well-positioned as the leading acquirer of self-storage assets in these markets," says NSR.
"The COVID-19 pandemic may also provide additional acquisition and development opportunities over the next 12-18 months. With a strengthened liquidity position as a result of this Equity Raising, NSR will be in a strong position to capitalise on these opportunities as they arise."
So far in FY20 NSR has made 16 acquisitions in Australia and New Zealand, adding 66,400 square metres to its portfolio of self-storage.
The placement will be issued at a fixed price of $1.57 per stapled security which represents a 7.1 per cent discount to the last closing price of $1.69 on Monday.
Post-raise NSR says it will have a strong liquidity position with cash and undrawn debt facilities of $628 million.
The company recently increased its debt facilities since the release of its H1 FY20 results, including additional documented debt facilities of $125 million from its existing banks and a commitment from JP Morgan for a $100 million debt facility. NSR also has no debt maturities until July 2021 with a weighted average debt expiry of 3.1 years as at 30 April 2020.
The COVID-19 pandemic has hardly caused dent to NSR's business, with all centres remaining open and operational during the period, even in New Zealand where most businesses were forced to close due to strict Government-imposed restrictions.
As a consequence of the business' resilience and the equity raising, NSR has updated its FY20 earnings guidance to between 8.2 to 8.8 cents per stapled security and the company intends on paying distributions this financial year.
Business News Australia
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