Charter Hall Retail REIT has agreed to acquire a 20% interest in a $281 million portfolio comprising two Sydney metropolitan shopping centres anchored by Woolworths, Coles, Aldi and Kmart.
This portfolio is currently owned by the Charter Hall Retail Partnership No. 6 Trust (RP6), which was formed 5 years ago and comprises two well established and strong trading Sydney metropolitan convenience-plus shopping centres, being Pacific Square, Maroubra ($189 million) and Bass Hill Plaza ($92 million). RP6 is owned 80% by Mercer, a global consultancy with US$282 billion in assets under delegated management, and 20% by Charter Hall Group, who has agreed to sell its interest to CQR following an approach by CQR. Charter Hall Group received no fees for this transaction.
Longer term CQR would like to enlarge the RP6 portfolio and increase its ownership towards 50%, subject to the approval of its wholesale partner. This partnership builds on the existing relationship between Mercer and CQR which jointly owns Bateau Bay Square, NSW.
Charter Hall Retail CEO, Greg Chubb said: “This is another portfolio enhancing acquisition which increases CQR’s weighting to metropolitan Sydney. Each centre benefits from being the dominant convenience centre in their respective catchments and present strong income growth prospects for the fund. Further, the acquisition is being funded by sale proceeds from recently announced divestments. RP6 is currently geared at 34% resulting in no material change to CQR’s gearing post divestments and acquisition.”
Pacific Square, Maroubra, located in Sydney’s eastern suburbs, is anchored by Coles and Aldi who have both recently expanded and refurbished their stores and perform significantly above industry benchmarks. The centre has recently completed a refurbishment including specialty tenancy remixing.
Bass Hill Plaza, located in Sydney’s south western suburbs, is anchored by Woolworths and Aldi supermarkets and Kmart. During FY20 the centre will be refurbished including significant speciality tenancy remixing, upgrade of amenities and expansion of the Aldi supermarket.