Centuria Divest $180m of Centres to Shopping Centres Australia

Centuria Capital Group subsidiary, Primewest, has divested five neighbourhood shopping centres on behalf of two unlisted wholesale funds, to SCA Property Group, for a collective $180 million, representing a 24.1% premium to book value, and reflecting a weighted average fully let yield of 6.0%.

Jason Huljich, Centuria Joint CEO, said, “These daily needs retail neighbourhood shopping centres have proved resilient throughout the past few years as local communities continued to rely on the supermarket anchored centres for their non-discretionary shopping. Both funds have been held for long-term periods and the sales provide compelling returns for our investors.”

  Asset  StatePurchase Price ($m)Fully Let Yield (%)  Occupancy by GLA (%)WALE by GLA (years)  Anchor Tenants
Dernancourt Shopping Centre  SA  46.0  5.3%  99%  3.2  Coles
Fairview Green Shopping Centre  SA  39.5  6.8%  99%  7.7Romeo’s Foodland
Brassall Shopping Centre  QLD  46.5  5.9%  99%  5.6Woolworths Aldi
Port Village Shopping Centre  QLD  36.0  6.2%  94%  2.9Coles K-Hub
Tyne Square Shopping Centre  WA  12.0  6.6%  100%  5.9  Supa IGA
Total 180.06.0%98%4.9 

The assets were held across two unlisted closed funds managed by Primewest. The first, a single-asset fund, which owned the Fairview Green Shopping Centre. The second, Primewest Retail Trust (PWRT), a multi-asset fund comprising four geographically diversified shopping. The divestments provide an exceptional result for both fund’s unitholders, delivering double digit internal rates of return (IRR).

JLL’s Sam Hatcher, Nick Willis, Jacob Swan (Brisbane), Nigel Freshwater (Perth) and Ben Parkinson (Adelaide) are representing the vendor.

JLL’s Joint Head of Retail Investments (Australia), Sam Hatcher said, “The assets were strongly sought on a portfolio and individual basis with 21 offers received, reinforcing the pent-up demand from varying capital types to own neighbourhood centres.

“Neighbourhood centre investment activity in 2022 continues to be strong, with 22 assets trading within the first half of the year, totaling AUD 900 million. The non-discretionary retail sector is proving to be the most resilient across all sectors and we expect capital to continue to increase their allocations to this highly defensive sector.

“With construction costs at elevated levels for the foreseeable future, existing and strongly performing neighbourhood centres will continue to attract a premium with constrained supply.” said Mr Hatcher.

Post the acquisitions, SCP will own and manage more than $4.6 billion of convenience-based shopping centres reinforcing its position as the leading convenience-based retail specialist in Australia. SCP expects to add value to the acquisition portfolio through its active asset management and leasing capabilities.

The acquisitions will be debt funded utilising existing undrawn bank facilities. SCP also intends to enter into an underwriting agreement with MA Moelis Australia Advisory Pty Ltd (“Moelis”) to underwrite a DRP take-up rate of 50% of the total final June 2022 distribution amount (or approximately $44.7 million). This means that if the take-up rate by unitholders under the DRP is less than 50%, Moelis will agree to subscribe for the shortfall. If the take-up rate by unitholders is greater than 50%, no underwriting will be required.

Premium Members can find all Primewest Articles, trading Analysis, Annual Reports and Presentations here

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