GIC has sold back a 49% interest in suburban mall Chatswood Chase in Sydney’s north to Australian shopping centre owner Vicinity Centres for A$307m (€184m), a 45% discount to the price the Singaporean sovereign wealth fund paid for the asset in 2017.
GIC purchased the stake for A$562.3m on a 4.75 cap rate in an asset swap deal that involved selling a 50% stake in three Sydney CBD retail assets, including the iconic Queen Victoria Building, to Vicinity Centres in a A$1.1bn transaction.
Peter Huddle, Vicinity’s CEO and managing director, said Chatswood Chase was “an iconic asset” with strong growth potential.
Vicinity will spend an estimated A$620m to redevelop the shopping centre as part of its strategy to focus on premier retail assets.
Work on the centre is due to commence next year and, on completion in October 2025, the shopping centre will have a forecast value of A$1.5bn, representing an estimated profit of A$200m, the company said.
Settlement of Chatswood Chase is expected in March next year, and Vicinity said the company retained the right to nominate another purchaser prior to settlement.
Simultaneously, Vicinity has sold a smaller suburban shopping centre, Roxburgh Village in Melbourne, to Hong Kong’s JY Group for A$123m.
The sale represented an 8.8% premium to 30 June 2023 book value and it followed the disposal of a 50% stake in Broadmeadows Central In Melbourne and non-core land and properties for a total of $A$174.5m since June this year.
“We are recycling and allocating capital to fund value-accretive developments and acquisitions of premium assets aligned with our portfolio strategy,” said Huddle.
With its latest purchase, JY Group’s Australian now owns a A$2bn-plus shopping centre portfolio in Australia.
Simon Rooney, CBRE’s head of retail capital markets – Pacific, said the Vicinity offering had attracted keen interest from primarily private-based capital, given the potential for future mixed-use development.
Rooney, who negotiated the off-market sale on behalf of the buyer, said the north Melbourne site’s development potential, solid underlying cash flow, coupled with the centre’s location in a population growth catchment, were key drawcards for JY Group.
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