Vicinity Centres share price on watch after Uni Hill acquisition

The Vicinity Centres (ASX:VCX) share price will be on watch today after the release of an update…

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The Vicinity Centres (ASX: VCX) share price will be on watch this morning following an announcement by the shopping centre-focused vertically integrated real estate trust company.

What did Vicinity Centres announce?

This morning Vicinity Centres announced that it has agreed to acquire a 50% interest in Uni Hill Factory Outlets in Victoria from MAB Corporation for $67.8 million. MAB Corporation will retain a 50% interest in the asset.

According to the release, the proposed acquisition price of Uni Hill reflects a capitalisation rate of 6.5%.

What is Uni Hill?

Uni Hill is a factory outlet that opened in 2008. It expanded in 2014 and currently attracts more than 2.5 million visitors per annum.

The retail centre comprises five mini majors and 94 specialty tenancies across 19,580 square metres of gross lettable area and has parking for 900 vehicles.

The acquisition is subject to ACCC approval, with settlement expected in the second quarter of 2020.

Asset divestment.

Vicinity has also announced the divestment of its 50% interest in Lennox Village in New South Wales for $31.5 million to joint-owner Challenger Ltd (ASX: CGF), in a simultaneous exchange and settlement on December 11 2019.

The company's CEO, Grant Kelley, was pleased with these transactions.

He said: "These transactions reflect the continuation of Vicinity's strategic portfolio refinement and focus on market-leading destinations, through the divestment of non-core assets and reinvesting those proceeds into value-accretive acquisitions and developments."

"Uni Hill is a well-established outlet centre located in Bundoora, a strongly growing catchment in Melbourne's northern suburbs, with population growth expected to average 2.0% per annum over the next 5 years. With high specialty store moving annual turnover (MAT) growth of 4.1% and low occupancy costs of 9.8%, we believe there is scope to drive further income and capital value growth as we have done with our outlet centres across the portfolio," Mr Kelley added.

"Subject to receiving ACCC approval, Uni Hill would be a great addition to Vicinity's successful DFO platform, with Vicinity becoming property and development manager of the asset and adopting the DFO brand for the centre," the CEO concluded.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. 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.

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