Shopping Centres Australasia buys seven shopping centres for for $135.8 million

The spun-off Woolworths shopping centre portfolio, Shopping Centres Australasia (SCA Property Group) has acquired a portfolio of seven neighbourhood shopping centres in Victoria and Queensland from a  private investor, for $135.8 million.

The portfolio of seven neighbourhood shopping centres acquired comprises:

• Alfred Square, VIC ($20 million on a 7.5% cap rate; 100% occupied; 8,964sqm GLA; 11.6 yr average age; anchor tenant 89% of gross income)
• Burdekin Plaza, QLD ($18.7mn on a 8.0% cap rate; 96% occupied; 5,513sqm GLA; 26.6 yr average age; anchor tenant 84% of gross income)
• Drouin Central, VIC ($12.3mn on a 8.0% cap rate; 99% occupied; 3,798sqm GLA; 4.6 yr average age; anchor tenant 79% of gross income)
• Langwarrin Plaza, VIC ($17.2mn on a 7.8% cap rate; 98% occupied; 5,087sqm GLA; 8.5 yr average age;anchor tenant 54% of gross income)
• Ocean Grove Marketplace, VIC ($29.9mn (incl. A$0.5mn of surplus land) on a 7.5% cap rate; 96% occupied; 6,910sqm GLA; 8.5 yr average age; anchor tenant 50% of gross income

The acquisition will be funded via a $90 million institutional placement and subsequent unit purchase plan (UPP), at $1.58 per share.

The A-REIT  was placed in a trading halt yesterday pending the announcement.

Goldman Sachs A-REIT analyst Andrew Macfarlane says the investment will increase Shopping Centres Australasia’s gearing 34.3% to 35.0% at the top end of management’s target range while net tangible assets will decrease from $1.58 to $1.56.

“While muted rent growth and the roll-off of Shopping Centres Australasia’s two-year rental guarantee provided by Woolworths arguably remain key issues for Shopping Centres Australasia, today’s acquisition goes a small way to diluting the potential shortfall in the 2014 financial year, Macfarlane says.