Vicinity Takes Total Control of Chatswood Chase

Retail property giant Vicinity Centres has snapped up the remaining half of Sydney mall Chatswood Chase in a $307-million deal.

The shopping centre landlord told the Australian Securities Exchange (ASX) it had exchanged unconditional contracts to acquire a 49 per cent interest in the North Shore centre from Singaporean sovereign wealth fund GIC.

The deal is expected to settle in March next year.

“Premium retail assets such as Chatswood Chase are a key pillar of our strategy and are an important enabler of resilient income growth and sustained value accretion through cycles,” Vicinity chief executive and managing director Peter Huddle said.

Vicinity told the ASX it was funding the purchase through existing and new debt facilities, as well as “selected asset sales”.

That includes the sale of Roxburgh Village, a shopping centre about 20km north of the Melbourne CBD, to Hong Kong-based JY Group for $123 million, representing an 8.8 per cent premium to June 2023 book value.

▲ Chatswood Chase will undergo a $620-million refurbishment, with main work starting early next year.

Under the sale agreement with JY Group, which is also expected to settle in March next year, Vicinity will continue to provide property management services at the shopping centre.

In June, Vicinity sold a 50 per cent interest in the shopping centre at Broadmeadows Central to Melbourne-based Nikos Property Group for $134.5 million, in a deal brokered by CBRE.

And, since then Vicinity has contracted to sell more than $40 million of non-core land parcels and adjacent properties.

“These transactions demonstrate disciplined execution of our active investment program,” Huddle said.

“We are recycling and allocating capital to fund value-accretive developments and acquisitions of premium assets aligned with our portfolio strategy while at the same time, preserving the strength of our balance sheet and credit metrics.”

▲ A render of rooftop office space proposed for the Chatwood redevelopment.

Plans are already under way for a $620-million refurbishment of the Chatswood Chase centre, which in July celebrated 40 years. Main works for the first phase of the redevelopment start early next year and will add more than 40 new restaurants, cafés and shops to the lower ground floor.

“Our redevelopment plans represent one of the most exciting and transformational projects to be undertaken in Australian retail property today and for the foreseeable future and will reinforce this exceptional asset as northern Sydney’s premier retail destination,” Huddle said.

However, the chief executive hinted the company may look for another institutional investor in the development.

“While we retain the right to nominate another purchaser prior to settlement, we are nonetheless pleased to take full control and expedite our board-approved redevelopment of the asset,” he told the ASX.