Vicinity Divests 11 Malls in $631 Million Sell Down


ASX-listed Vicinity Centres has announced the sale of 11 shopping centres for $631 million as part of its divestment strategy of non-core assets.

Retail landlord SCA Property Group has swooped in on ten of the convenience-based shopping centre portfolio for $573 million, reflecting an initial yield of 7.47 per cent.

Vicinity chief executive Grant Kelley described the sale to SCA Property, Woolworths largest landlord, as making “strategic sense for both parties”.

Post the acquisition, SCA Property Group will control more than $3.1 billion of convenience-based shopping centres, making it the largest convenience-based retail specialist in Australia.

But first, SCA is looking to raise more than $300 million from institutional and retail investors to help fund the 10-strong portfolio purchase. The Property Group also indicated it would sell down its shares in Charter Hall Retail REIT to help fund the acquisition.

The remaining shopping centre, Belmont Village in Victoria, was acquired by a private investor for $58 million.

The aggregate sale price of $631 million for the 11 assets reflects a 5.1 per cent discount to the 2018 fiscal year book values, and a weighted average capitalisation rate of 6.9 per cent.

Related: SCA Sells Four Retail Centres into New $58m Unlisted Fund

Vicinity announced in August it will spend million $90 million revamping Roselands Shopping Centre in Sydney’s west.
Vicinity announced in August it will spend $90 million revamping Roselands Shopping Centre in Sydney’s west.

The proceeds of the eleven assets will be reinvested in line with Vicinity’s focus on value-accretive capital allocation, including investment in its retail development pipeline and, potentially, to buy back Vicinity securities.

The 10-strong portfolio picked up by SCA Property Group include Bentons Square and The Gateway in Victoria, Lavington Square and West End Plaza in NSW, North Shore Village and Oxenford Village in Queensland, Currambine Central, Kalamunda Central, Stirlings Central and Warnbro Centre in Western Australia.

Vicinity has now offloaded 35 shopping centres for more than $2.5 billion at a 0.5 per cent premium to book value, these transactions form part of Vicinity’s non-core asset divestment program, announced earlier this year.

Vicinity chief executive Grant Kelley said the sales reflect significant achievement and advance its strategy to unlock major potential.

“It is an important step in delivering strong and sustainable growth through focusing our directly-owned portfolio on approximately fifty market-leading destination assets, expanding our wholesale funds platform and realising mixed-use opportunities across the portfolio.”

Macquarie Capital’s Antony Green was corporate adviser to Vicinity, and JLL’s head of retail investments Simon Rooney brokered the transaction.

Vicinity’s guidance for the 2019 financial year remains unchanged at 18 to 18.2 cents per security.

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