Charter Hall grabs share of two Sydney shopping centres
The Charter Hall Retail REIT has snapped up a 20% stake in a $281 million portfolio made up of two Sydney centres anchored by Woolworths, Coles, Aldi and Kmart.
The portfolio is now held by the Charter Hall Retail Partnership No 6 Trust that was set up five years ago. It owns Pacific Square, Maroubra, (valued at $189 million) and Bass Hill Plaza ($92 million).
The unlisted RP6 fund is 80% owned by Mercer, the global asset consultancy, and 20 per cent by Charter Hall itself.
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The listed funds manager is selling its interests to the shopping centre fund it runs and will not receive fees for this transaction.
The deal is a precursor to Charter Hall Retail taking a larger interest and the fund says it wants to both enlarge the RP6 portfolio and increase its ownership towards 50%, with the backing of Mercer.
This partnership builds on the existing relationship between Mercer and the fund, with the pair jointly owning Bateau Bay Square in NSW.
Charter Hall Retail chief executive Greg Chubb says the deal is a “portfolio-enhancing” acquisition that increases the fund’s weighting to metropolitan Sydney.
While the entire retail sector is under pressure, Charter Hall said each of the assets was benefiting from being the dominant convenience centre in their respective areas and offered strong income growth.
Charter Hall Retail has been selling smaller centres and will pour the proceeds of these into buying the stake in RP6.
Pacific Square in Sydney’s eastern suburbs is anchored by Coles and Aldi, which have both recently expanded and refurbished their stores, with the landlord also remixing other tenants.
Bass Hill Plaza, in Sydney’s southwestern suburbs, is anchored by Woolworths and Aldi supermarkets and Kmart.
It will be refurbished this year to draw in new tenants and expand the Aldi outlet.
Charter Hall Retail has a portfolio of 34 Woolworths supermarkets, 33 Coles supermarkets and 11 Aldi supermarkets and remains focused on dominant convenience-based centres.
The deal saw the REIT tighten the range of its operating earnings per unit growth guidance from 1.5-2% to 1.7-2% for this financial year.
This article originally appeared on www.theaustralian.com.au/property.
