Vicinity Buy Factory Outlets Sell Neighbourhood

Vicinity Centres has agreed to acquire a 50% interest in Uni Hill Factory Outlets in Victoria from MAB Corporation for $67.8 million, reflecting a 6.5% cap rate.

Uni Hill opened in 2008, expanded in 2014, and attracts more than 2.5 million visitors per annum. The retail centre comprises five mini majors and 94 specialty tenancies across 19,580 sqm of gross lettable area and has parking for 900 vehicles.

Vicinity also announced the divestment of its 50% interest in Lennox Village in New South Wales at 30 June 2019 book value of $31.5 million to joint-owner Challenger, in a simultaneous exchange and settlement on 11 December 2019.

Lennox Village was held by Vicinity at a value of $36.5M prior to the sale announcement in June 2018. The recent transaction reflects a 6.75% cap rate and a -13% discount to the 2018 Valuation.

Lennox Village is a neighbourhood centre located in Emu Plains near Penrith, and comprises an Aldi, Woolworths and 20 specialty shops across 10,143sqm or NLA.

Mr Grant Kelley, CEO and Managing Director, 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."

MAB Corporation will retain a 50% interest in the asset.

Mr Kelley said, 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.