Vicinity plans asset sales of up to $1 billion as portfolio rejig
Retail property group Vicinity Centres has identified about $750 million to $1 billion of asset sales opportunities, subject to market conditions.
The proceeds will be redeployed into value-accretive development and acquisition opportunities, it said, such as the recently announced $319 million acquisition of The Shops at Ellenbrook and Livingston Marketplace in Perth.
“Vicinity’s strategy is to own high-quality assets across the retail spectrum that are well-positioned in strong catchments and where we can add value through our intensive asset management and development capability," Angus McNaughton, CEO and Managing Director of Vicinity, said.
Vicinity has $22.2 billion in retail assets under management across 93 shopping centres, making it the second largest listed manager of Australian retail property, the announcement said.
McNaughton said the group would target an annual total return in excess of 9 % and underlying earnings growth of more than 3%.
Vicinity will also cancel its $1.8 billion bridge facility by the end of the calendar year. This follows the establishment of $700 million of new bank debt facilities and the issuance of A$433 million of US Private Placement (USPP) Notes which will settle next week.
“Our development pipeline currently stands at $1.5 billion on balance sheet – projects at Chadstone Shopping Centre, Warriewood Square, Colonnades and Halls Head Central are underway and we expect works at Mandurah Forum to commence in the first half of next year," said Michael O’Brien, the company's chief investment officer.
"These developments are forecast to generate internal rates of return of 10% to 15+%.
He added that the company will look to selectively acquire assets and cited the examples of The Shops at Ellenbrook and Livingston Marketplace in Perth.
The company — formed out of the merger of Federation Centres and Novion Property Group — is on track to achieve 75% of merger operational cost synergies by June 2016, McNaughton said.