Our target price of $1.40 is a blended valuation based on our NAV-based sum-of-the-parts valuation and our DCF. For our NAV-based sum of the parts, we value ASK's portfolio at a discount to book value, and apply suitable multiples to the income generated from the platform/development pipeline. Our DCF factors in a discount rate of 8.69%, a beta of 0.67, a risk-free rate of 4.0%, and an equity risk premium of 7.0%.

ASK is High Risk based upon our quantitative model but assigning a High Risk rating is not supported by other qualitative factors such as being in a sub-sector of positive structural demand for self-storage in Australia and relatively deep discount to NTA, and so a High Risk rating has not been applied.

We view ASK as being exposed to a range of risks:  

A major near-term risk is the earnings and asset value impact of higher interest rate costs and pressure on the underlying consumer. A key risk relates to the potential for expanding cap rates and lower valuations.

Financial risks include the risks typically associated with the use of debt, including magnifying the impact of changes in portfolio cashflows and valuation, and refinancing and covenant risks. Changes in debt costs will also affect the group’s interest expense, and could influence the short-term earnings impact of acquisitions, developments, and disposals.

Valuation risks include movements in the market’s assessment of appropriate cap rates on the group’s properties, and/or the required return on the cashflow stream that the stock delivers to securityholders.

Favourable or adverse changes in these factors may result in the share price exceeding, or not meeting, our target price.