This article is from the Australian Property Journal archive
SCA Property Group (SCP) and are teaming up with the Singaporean Government’s GIC to establish a new $750 million metro convenience retail joint venture to invest in existing assets across the country.
SCA Metro Convenience Shopping Centre Fund will be unlisted and seeded with seven assets from SCP’s portfolio. The assets when combined will total $284.5 million at a weighted average capitalisation rate of 4.84%.
The Singapore-based GIC, who in May announced 2022 plans to establish its 11th global office in Sydney, will hold an 80% interest in the fund, pending FIRB approval, while SCP will be the investment manager of the joint venture and hold the remaining 20% equity interest.
The initial seed portfolio’s pricing reflects a circa 9.3% premium to SCP’s valuations at 30 June 2021, with initial proceeds set to be funnelled into debt reduction and into future opportunities.
The fund will not only establish GIC and SCP in a globally recognised strategic partnership, but will enable SCP to increase its exposure to and participation in the convenience-retail sector.
The fund will be built up with first rights over neighbourhood assets in both Sydney and Melbourne to avoid conflict with SCP’s balance street, while meeting the group’s core strategy to deliver defensive and resilient cash flows to provide its unitholders with secure and increasing distributions.
SCP plans to redeploy the sale of the seed portfolio into higher yield and higher return assets within the next year.
SCP did not announce any change to their FY22 AFFO guidance, which was posted at 15.0 cents per units, following a first quarter marked by portfolio resilience, even in the face of extended lockdowns across New South Wales and Victoria.
Assuming FIRB approvals are received and financing secured, SCP and GIC anticipated the close date for the establishment of the joint venture to be at 31 January 2022.
