This article is from the Australian Property Journal archive
HAVING led a consortium bid to score the Myer Emporium in Melbourne last week, CFS Retail Property Trust has secured a second major purchase yesterday by paying $281.5 million for the Chatswood Chase shopping centre in Sydney.
CFX already owns a half a stake in the centre and has bought the remaining 50% interest from Commonwealth Bank of Australia, reflecting a 5.25% cap rate.
Chatswood Chase is a premium regional shopping centre located 12 kilometres north of Sydney, and one of the best performing assets in CFX’s portfolio.
The centre currently has a GLA of 49,450 sqm over four levels with multi deck parking for 2,329 vehicles and includes 127 specialty shops and is anchored David Jones, Kmart, Harvey Norman and a Coles supermarket.
Major tenants account for 64% of GLA and 25% of gross income.
CFX’s fund manager Michael Gorman said the opportunity to acquire the remaining 50% interest in this centre provides an excellent catalyst for the trust to capitalise on a significant redevelopment opportunity that we have been planning for this asset.
The acquisition is forecast to be earnings neutral in FY2008 and provides the trust with the opportunity to derive the full benefits from the expected 7% to 8% yield on completion of the proposed redevelopment.
The trust previously reported the acquisition of an adjoining office building at 19 Havilah Street in Chatswood and has since also secured an option to purchase the access lane to Chatswood Chase off Malvern Avenue to facilitate the proposed redevelopment.
Work on the $170 million Chatswood redevelopment, which will add approximately 10,300 sqm of GLA and 130 new car parking spaces, are expected to commence in the second half of 2008 with completion due in the first half of 2010.
Colonial First State Global Asset Management’s head of listed property Darren Steinberg said since acquiring the centre in November 2003, the income from Chatswood Chase has grown by 15.6% and the valuation by more than $90 million.
As a result of the acquisition, the trust’s portfolio will increase weighting towards prime regional shopping centres and improves geographic diversification and weighting to New South Wales.
It will also expand CFX’s development pipeline to $1.2 billion and the NTA is expected to increase from $2.11 to $2.12.
The acquisition will be partially funded through a $200 million institutional placement.
On settlement, the acquisition is forecast to be minimal to neutral on gearing. The acquisition is conditional upon approval by the trust’s unitholders as the vendor is an associate of the Responsible Entity.
A unitholder meeting is planned for August 2007.
Australian Property Journal
