Shopping centre giant Vicinity Centres has identified up to $1 billion of non-core properties that it could sell as part of its plans to shake-up its $22 billion portfolio.
The company -- which was created in June out of the merger of Federation Centres and Novion Property Group -- has announced it will proceed with asset sales “subject to market conditions” and redeploy the capital into its development pipeline.
The group has not named the centres which have been identified.
Vicinity chief executive Angus McNaughton said that the group’s strategy remains unchanged.
He added that the real estate investment trust was on target to achieve 75 per cent of merger synergy savings by June.
“Vicinity’s strategy is to own high quality assets across the retail spectrum that are well-positioned in strong catchments and where we can add value through our intensive asset management and development capability,” Mr McNaughton said.
“We are also pleased to update the market on our recent refinancing activities which will result in us cancelling our $1.8 billion bridge facility by the end of the calendar year,” he said.
Analysts from Macquarie have identified nine of the lower quality assets, with a total value of $1.4bn, in the portfolio which may be sold by Vicinity.
Most of these properties are in Victoria, including properties located in Altona Gate, Brimbank, Bayside, Broadmeadows, Cox Hill Central (North) and Brandon Park.
There is also a West Australian property identified, at Albany, and a Queensland centre at Monier Village.
“These assets typically have a combination of lower sales productivity, higher occupancy costs and higher vacancy,” the Macquarie analysts said.
Vicinity, Australia’s third biggest property trust whose biggest shareholder is billionaire John Gandel, has reworked its portfolio since the merger was implemented while it is also exploring options on the development potential on its $22 billion portfolio.
It this month bought two shopping centres from the Insurance Commission of Western Australia for $319m.
In August, it sold three Tasmanian shopping centres to Woolworths spin-off SCA Property.
The moves come as a host of property landlords are selling out as values continue to soar higher.
Billionaire Lang Walker will next year take to market the entire $2.5bn Collins Square project in Melbourne’s Docklands, which could be Australia’s highest ever property sale.
Mr Walker’s company, Walker Corporation, has appointed investment bank UBS to handle the sale of the portfolio, which includes five office towers at the western edge of the Melbourne CBD.
Brookfield Property Partners is selling more than $2bn worth of office and retail property, while Charter Hall Group and Valad Property Group are also selling portfolios.
In July, sovereign wealth fund China Investment Corporation paid $2.45bn for a portfolio of office towers sold by Morgan Stanley’s Investa Property Group.
This article first appeared in The Australian Business Review