Vicinity Acquires $420m Stake in WA Shopping Centre

ASX-listed Vicinity Centres has acquired a 50 per cent stake in a Western Australian shopping centre for $420 million. 

The retail property investor announced the acquisition of part of the “fortress-style” Lakeside Joondalup centre, in “one of Perth’s principal activity centres” this week.

It now co-owns the site with the Australian Prime Property Fund for retail managed by Lendlease, after Australia’s sovereign wealth fund Future Fund announced its intent to sell its half last year.

According to Vicinity chief executive Peter Huddle, the centre has been “on our target list for some time” and fits into its strategy of increasing the quality of its retail asset portfolio, which has led to its selling three WA assets this year.

Vicinity has also secured property management and retail development rights for the centre, allowing it to “enhance asset performance, whilst earning additional fee income”.

“The acquisition of Joondalup, together with the forthcoming redevelopment of Galleria and sale of four non-strategic assets in Western Australia, reflects our deliberate strategy to recycle and redeploy capital in order to right-size our investment and strengthen our asset portfolio in Western Australia,” Huddle said in a statement to the ASX.

The centre achieved $798.4 million in annual retail sales.

It is home to flagship retail stops Myer, Target, Kmart, Big W, UNIQLO, H&M, three supermarkets as well as more than 240 other retailers, leisure and food offerings.

▲ Maddington Central is the third WA centre Vicinity has moved along since September 2023.

At the same time, Vicinity announced its full-year results, announcing a “highly productive year” including strong leasing outcomes with occupancy at 99.3 per cent—its highest since before the pandemic.

At 99.6 per cent, CBD centre occupancy exceeded pre-Covid levels, “reflecting… retailer confidence in the future of CBDs”.

Total revenue reached $1.25 billion, up slightly from $1.2 billion in 2023, whilst net profits more than doubled to $549 million.

This is despite elevated costs of living that “tempered” retail sales growth in the second half of the year. 

Moody’s vice-president and senior analyst Saranga Ranasinghe, said, “The REIT maintained high levels of occupancy as well as positive leasing spreads, which highlights the resilience of its high-quality retail assets.
 
“The REIT benefits from its strong portfolio with favourable lease structures and robust operating metrics, a solid balance sheet and ample liquidity. 

“These strengths, provide a credit buffer against material downside risk from weak consumer sentiment and discretionary spending.”