Vicinity cashes in WA retail boom as syndicators swoop on centres
Vicinity Centres is selling Maddington Central
Retail property heavyweight Vicinity Centres is ready to exit more of its WA portfolio, with another two major shopping centres to be sold off for more than $170m in total.
The company is selling Maddington Central in Perth to property funds house Realside and is also in talks to sell Halls Head Central, which it co-owns with super fund backed ISPT, to Centuria Capital for about $70m.
The forthcoming sales will continue a run of deal-making in WA which show the demand for assets in the resources-rich state and the desire of fund houses to get an exposure to its shopping centres.
The parties and agent Simon Rooney of CBRE, who is brokering both deals, declined to comment.
The two sales will add to Vicinity’s roster of exits from its WA retail holdings, which include selling off Dianella Plaza in Perth’s northern suburbs to active Perth-based funds manager Greenpool Capital for $76.25m.
Vicinity is partly looking to back its large-scale development projects with the sales proceeds from offloading the malls.
Vicinity Centres is selling Maddington Central
At its interim results, Vicinity chief executive Peter Huddle said the development of the One Middle Road office tower and an overhaul of the fresh food and dining precinct at Melbourne’s Chadstone shopping centre were well progressed.
In Sydney, it said the redevelopment of Chatswood Chase was advancing. Construction of the lower ground fresh food and dining precinct will finish this month and more works are to come, with retailers already committing to two-thirds of the space.
Vicinity expects investment capital expenditure this financial year to be about $350m, partly reflecting delayed redevelopment of Galleria in WA, and further development spend after it settled on buying the remaining 49 per cent interest in Chatswood Chase from GIC.
WA has been a hub of retail deals with about $850m of centres trading last year, ranking the state third highest for retail deals, behind Victoria at $1.3bn and Queensland at $1.2bn. It was bolstered by the $465m sale of Midland Gate to Fawkner Property and Hong Kong-based PAG last October.
Realside is raising funds for a new unlisted trust to back its purchase of Maddington Central. The subregional complex is trading on a fully leased yield of 8.8 per cent, with opportunities for further development, the buyer said.
Vicinity Centres is selling Hall Head Central.
The 27,661sq m complex is on a 131,606sq m parcel of land, including 30,509sq m of separately titled vacant land. It performs well, with Coles, Woolworths and Kmart as high performing anchors with long leases at an average of eight years and a focus on non-discretionary or discount department store tenants.
Realside will look at remixing some tenants and work up plans for the vacant land, which it believes can be developed. The firm said that it bought at a price reflecting a 40 per cent discount to the combined land and building replacement value.
The company’s founding partner Mark Vonic and chief executive Linda Rudd said in a letter to investors that “we believe near peak interest rates, surging population growth and high retail occupancy levels will support a stabilisation and, subsequently, compression in retail yields going forward … in our view making now an appealing time for investors to build their exposure to subregional retail assets”.
Centuria could look to slot Halls Head Central, a single-level subregional centre southwest of Mandurah, into an unlisted fund. The centre is anchored by Kmart, ALDI and Coles and has fashion shops, an alfresco dining precinct, playground and more than 35 specialty stores.
The 19,379sq m centre is anchored by ALDI, Coles and Kmart and has 45 tenants overall. It had a moving annual turnover of about $135.8m and is about 95 per cent occupied.
