This article is from the Australian Property Journal archive
SCENTRE Group has offloaded a half-share of Westfield Burwood in Sydney’s inner west to Perron Group for $575 million, and has received approval from the Victorian government for a $500 million expansion of Westfield Doncaster in Melbourne.
Westfield Burwood is ranked among the top 50 shopping centres in Australia, receiving more than 14 million visits per annum and boasting total retail sales of close to $500 million.
The centre’s anchors include David Jones, Coles, Woolworths, Event Cinemas, Kmart and Target to go with 230 specialty stores, across 63,248 sqm of gross lettable area.
The transaction marks yet another joint venture between the retail giant and privately-held Perron Group, which has bought 50% interests in Westfield Airport West, Westfield Geelong and Westfield Woden.
Perron Group’s latest acquisition price represents a 4.1% premium to Scentre Group’s book value at 31 December 2018, and a sub-5% yield.
“We are pleased to extend our long-standing relationship with the Perron Group into Westfield Burwood,” Scentre Group chief executive officer, Peter Allen said.
Proceeds from the will initially be used to repay debt, and Allen said they would also provide the Group with further capital to “pursue our strategic objectives of creating long-term value for securityholders”.
The transaction is expected to be dilutive to funds from operations per security in 2019 by around 0.2 cps. The forecast distribution for 2019 remains unchanged at 22.60 cps.
Westfield Burwood was among $12 billion worth of Scentre assets that Macquarie analysts had previously identified as potentially suitable for divestment to reduce Scentre’s high leverage, given the landlocked shopping centre’s limited development potential.
Retail landlords are looking at ways to enhance the value of their shopping centre sites through repositioning and redevelopment programs to combat a difficult trading environment.
Less than a year ago, Scentre acquired a half share in Sydney’s Westfield Eastgardens for $720 million, which it was already managing, with the centre offering retail expansion and mixed-use development potential.
In Melbourne’s eastern suburbs, Victorian Planning Minister Richard Wynne has just approved Scentre’s $500 million redevelopment masterplan for Westfield Doncaster, which would see a 14-level storey tower built above a two-level retail podium as well as more parking and a larger bus interchange.
Around 43,000 sqm of new retail space and 18,000 sqm of commercial office space would be added to the shopping centre, with an emphasis on high-end specialty fashion, dining and entertainment, and health and wellbeing.
Lendlease is currently shopping around a half-share in Westfield Marion in Adelaide, which is co-owns with Scentre, and is hoping for nearly $740 million, while the Vicinity Retail Partnership and a Vicinity Centres mandate client have listed the Midland Gate in Perth for sale, within weeks of completing a $100 million redevelopment and expansion of the regional shopping centre.
Australian Property Journal
