Vicinity to Offload $1 billion in Assets

Listed landlord Vicinity Centres will offload $1 billion in sub regional and neighbourhood shopping centre assets in a significant repositioning of its retail portfolio designed to increase its exposure to market leading investments.

Unveiled on Monday, Vicintiy said the plan would provide funds for new development opportunities that would enhance its portfolio, following a review.

“It is clear that we need to focus our resources on creating destinations that provide market-leading shopping, diving and entertainment experiences,” chief executive Grant Kelley said on Monday.

Centres such as The Glen and Box Hill Central in Melbourne; Galleria in Perth; as well as Chatswood Chase and Bankstown Central, Sydney are expected to benefit from reinvestment of freed capital.

Additional development opportunities are also being considered, following the recent buy of Sydney’s Queen Victoria building centre and the DFOs outlet portfolio.

JLL has been appointed as Vicinity’s real estate provider on the divestments to co-ordinate the asset sales process in tandem with Macquarie Capital as a corporate advisor.

The divestment is an acceleration in Vicinity’s strategy to reposition its portfolio away from lower grade assets, which has already seen $1.9 billion worth of investments offloaded.

“There are other assets in the portfolio to which the market is not ascribing, in our view, full value. We are working through options as how to deal with these,” Kelley said.

The landlord expects a one cent dilution in its funds from operations per security because of the divestments before freed up capital can be redeployed.

No impact on FY18 is expected, suggesting Vicinity will wait until at least FY19 before offloading any of the non-core assets.

Published June 4, 2018 – Matthew Elmas as on Inside Retail Australia.