Vicinity divests $195m of retail property

Property group Vicinity Centres has announced it has divested from two retail properties worth a cumulative $195.5 million, which will be used to pay down debt. 

Vicinity’s 25 per cent stake in the Mt Ommaney Centre, Queensland sold for $94.5 million to YFG Shopping Centres, while Corio Central in Victoria sold for $101 million by IP Generation. 

Due to the timing of the properties’ settlement dates, Vicinity is forecasting a 2 cents per security impact on its earnings, and has adjusted its expected security guidance accordingly – from 17.8 to 18 cents per security to 17.6 to 17.8 cents per security. 

“The sale of these non-core assets is in line with our strategy of focusing our portfolio on market-leading destinations,” Vicinity Centres chief executive Grant Kelley said in a statement on the ASX. 

Following the divestments, Vicinity’s portfolio has a 76 per cent greater average asset value, and 35 per cent stronger comparable specialty store  sales productivity, according to Kelley. 

Vicinity had so far divested from 37 non-core assets for a total of $3.3 billion, at a combined 0.7 per cent premium to book value. The proceeds have been utilised to acquire $1.1 billion worth of properties, which have since grown in value by 12.3 per cent. 

The divestments were handled by property firm CBRE, with CBRE head of retail capital markets Simon Rooney noting the market has begun seeing more positive investor sentiment and heightened enquiries, despite retail transaction volumes decreasing over 2019. 

“There is a general acknowledgement that the retail sector has been oversold, and that stabilised, better quality assets with an obvious growth and value add profile represent an attractive value proposition compared to other sectors,” Rooney said. 

“An increasing number of these strategic retail assets, that have traditionally been long term institutional holds, are now presenting themselves.”

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