Vicinity Fights Retail Slump with Mall Sales


ASX-listed retail landlord Vicinity Centres has resumed its shopping mall sell-off, offloading two malls in Victoria and Queensland at a 0.5 per cent discount to their combined book values.

Pressure on the retail sector from lacklustre consumer spending, weak demand and online competition has prompted a large-scale sell off as institutional investors fight to reduce exposure in an uncertain economic environment.

Vicinity revised its financial year guidance downwards, reducing funds from operations by 0.2 cents to 17.6 due to the timing of asset sales, Vicinity chief executive Grant Kelley said.

The shopping centre giant sold the sub-regional Corio Central in Victoria for $101 million and a 25 per cent stake in Brisbane’s Mt Ommaney Centre for $94.5 million.

The 31,052sq m Corio Central asset, which is located on Bacchus Marsh Road 10 kilometres north of Geelong’s CBD, sold to property syndicator IP Generation on a 3.8 per cent discount to its book value. Anchor tenants Coles, Woolworths and Kmart take up 44 per cent of the regional centre’s floorspace.

The Mt Ommaney Centre in Brisbane’s south-west was picked up by the Fu family office YFG Shopping Centres, which controls 20 shopping malls in south-east Queensland including Australia Fair on the Gold Coast and Sunnybank Plaza.

The 25 per cent stake in the 56,469sq m centre represented a 3.3 per cent premium to its book value.

Related: Retail Headwinds Hit Vicinity Centres Bottom Line

▲ Vicinity achieved a 3.3pc premium on the book value of a 25pc stake in the Mt Ommaney centre.
▲ Vicinity achieved a 3.3pc premium on the book value of a 25pc stake in the Mt Ommaney centre.

Kelley said that the latest sales were in line with the strategic divestment of Vicinity’s portfolio.

“The sale of these non-core assets is in line with our strategy of focusing our portfolio on market-leading destinations,” Kelley said.

“The transactions will [provide] around a 90 basis point reduction in gearing, with the proceeds assumed to repay debt in the short term.”

Vicinity has offloaded 37 non-core retail centres for $3.3 billion at a combined 0.7 per cent premium to book value to focus on the development and management of “destination” assets.

Vicinity has spent more than $1 billion progressing mixed-use development at its more high-performing retail assets including a major revamp of The Glen, a newly-opened $130 million hotel at Chadstone, an eSports stadium at the Emporium and the acquisition of land at Victoria Gardens for a mixed-use project.

Retail sales figures for September released on Monday show that cuts to tax and interest rates has not flowed through to consumers, with weak wages growth and a lack of disposable income still weighing on consumer confidence.

The nation’s second largest listed mall landlord has $26 billion of retail assets under management across 66 shopping malls.

Both assets are due to settle before the end of the calendar year.

The Vicinity Centres share price closed down slightly at 2.65 cents on Wednesday.

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