ASX-listed property group Abacus is in advanced discussions to expand its storage fund.
The potential acquisitions include a portfolio of five storage facilities in Townsville, two in southern Brisbane, one in Hamilton (New Zealand) and an 85 per cent interest in a portfolio of storage facilities and ancillary properties in Canberra and Queanbeyan.
The acquisitions would increase total assets in the fund by $86 million to $310 million, the company said in a newsletter to shareholders.
If the acquisitions go ahead, Abacus will look to raise capital by issuing shares. Existing shareholders will have priority in buying the new securities.
Abacus director of fund management Tom Hardwick indicated the company would seek a public listing once the storage fund reached a size of $500 - $600 million.
"But you would not list anything in the current market," Hardwick said.
In recent weeks, Abacus' share price has seen a sharp decline. The company said this does not reflect the performance of the business and attributed it to a number of external factors.
Apart from the negative sentiment in the equity market, Abacus blames large capital raising in the listed property trust sector, including Stockland and Goodman Group, for the price fall.
A re-weighting by institutional investors away from smaller stocks in favour of large index stocks, including Westfield and CFS, has contributed to the decline, while investors remain concerned over gearing, loan covenant compliance, and the ability of trusts to grow.
Abacus said it is developing a strategy to deal with these challenges.
