SKAGEN m2 had a welcome lift this morning with news that Norwegian Self Storage Group (SSG), currently the fund's sixth largest holding at around 4.5% of assets, has received a bid from US pension fund TIAA (Teachers Insurance and Annuity Association of America). Its all-cash offer of NOK 40 per share represents a premium of 66.7% over yesterday's closing price. The $352m bid, which is for 100% of SSG's shares and is recommended by the Board, has already been accepted by over 70% of shareholders and is expected to complete in the fourth quarter barring unforeseen circumstances.
Long-term investor
SSG is one of the largest self-storage providers in Scandinavia with over 140 facilities for individual and business customers and has a particularly strong position in Norway. SKAGEN m2 is a top ten shareholder, owning around 2.9% of the company.
We first invested over five years ago and have been part of the company's successful journey which has seen it generate shareholder returns over 18% annually during this period. Our investment thesis was based on the company's strong presence in a growing market segment combined with an attractive valuation which saw SSG trading at a healthy discount to both European and US peers.
Research rewards
Its attraction as a potential takeover target was highlighted in 2021 when Swedish platforms Green Storage and 24Storage were acquired, also by TIAA. A year earlier, a US private equity company took a 25% stake in SSG, while our research revealed that several large international investors later became significant shareholders in the company, increasing the likelihood of a potential deal.
The proposed takeover by TIAA is good news for SKAGEN m2's unitholders, particularly given the size of our position and healthy premium offered. It follows a number of successful portfolio deals in a bid bonanza for real estate companies in recent years.
Strong cash flows and economic resilience
With around 10% of assets invested in self-storage companies, SKAGEN m2 has been overweight the segment versus the benchmark due to its strong cashflows, economic cycle resilience and interesting demand drivers which are often linked to life changing events and family dynamics. Our other self-storage holdings include Shurgard and Big Yellow Group.
Before this morning's news, SKAGEN m2 was 1.9% ahead of the MSCI ACWI Real Estate Index in EUR terms year-to-date[1]. You can read more about the fund's recent activity as well as our thoughts on the real estate market generally in our latest monthly report.
[1] As at 19/09/23 in EUR, net of fees.