Vicinity Centres Re Ltd (ASX: VCX) is selling ten ‘Sub Regional’ and ‘Neighbourhood’ shopping centres to Shopping Cntrs Austrls Prprty Gp Re Ltd (ASX: SCP) and one ‘Neighbourhood’ shopping centre to a private investor, for a combined total of $631 million.
These properties are being sold at a 5.1% discount to the book value at 30 June 2018.
The sale of the eleven shopping centres is part of Vicinity’s non-core asset divestment program, which was announced in June 2018 and aims to sell up to $1 billion of sub regional and neighbourhood shopping centres. Discussions are progressing with prospective purchasers of the three remaining assets within the divestment program.
Vicinity said that the proceeds of the sales announced today will be reinvested into its other shopping centres, with potential for a buy-back. Guidance for FY19 remains the same at 18 cents to 18.2 cents per security.
Vicinity’s CEO and Managing Director Mr Grant Kelley said “These transactions are a significant achievement and advance our strategy to unlock major potential in the business. In the interest of progressing our strategy of focusing on owning highly productive market-leading destination assets, the sale of the ten-asset portfolio to SCP makes strategic sense for both parties.”
SCA Property Group will fund the $573 million acquisition through a combination of capital raising and debt. The purchase price gives SCA Property Group an initial yield of 7.47% on a fully-let basis.
Vicinity’s share price was down 0.3% at end of trade today.
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The Motley Fool Australia owns shares of Shopping Centres Australasia Property Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.