Lendlease have confirmed a $670m deal with Singaporean-listed SPH REIT to sell their 50% stake in Westfield Marion, following the rejection of a pre-emptive right held by SCentre.
The deal results in Lendlease coping a near 9% discount to its previous valuation, a result which will likely see valuers scrambling to re-rate the sector. Westfield Marion is one of the best quality fortress malls to have hit the market in recent times and was the sale was seen to become a benchmark for the industry.
Westfield Marion is the only shopping centre in South Australia to feature two full-line department stores in David Jones and Myer, and is also home to Harris Scarfe, Big W, Kmart, Target, Coles, Woolworths, ALDI, Dan Murphy’s and Bunnings. There is also an Event Cinemas complex on site as well as approximately 310 specialty stores and a fresh food precinct.
Lendlease were forced to sell the Centre following a significant number of redemption requests from its investors. Once the redemption window opened, investors were faced with joining the queue and sharing in the sale of a high quality asset in a difficult market or face the prospect of riding down further valuation losses as the market re-rated in the wake of the result. Many investors chose to join the queue which built up to $2bn.
At the beginning of the process, the 50% share in the mall was valued at $737.5 million, based on a yield of 5.15%, which was equivalent to the book valuation for the remaining stake held by Scentre Group. The final sale price implies a capitalisation rate of about 5.75%, a softening of about 60bps.
Other Landlords in the retail sector have had similar pressures from its investors, including Vicinity, AMP Capital and GPT. Vicinity this week announced the sale of its 25% stake in Brisbane’s Mount Ommaney and Corio Central near Geelong in Victoria. While they were sold at a slight discount to their valuations at June 30, they showed significant falls since 2017. Mount Ommaney has sold at a -10% discount to its December 2017 book value and Corio sold at a -22% discount to its December 2017 value.
The deal on Westfield Marion was brokered by CBRE and Colliers.
The Singaporean-listed SPH REIT, which is sponsored by the media conglomerate Singapore Press Holdings, also has interests in Figtree Grove Shopping Centre.
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