Vicinity Centres buys final piece of DFO South Wharf
Vicinity Centres has grabbed the 25% of Melbourne shopping mecca DFO South Wharf that it doesn’t own, agreeing to buy out joint owner Plenary Group.
The shopping centre portfolio owner and manager will pay Plenary Group $141.25 million for its quarter stake, in a deal that is expected to settle in April.
The deal to acquire the stake comes on a passing yield of 7% and will be completed after the shopping centre’s new car park with 300 spaces is completed early this year.
Commercial Insights: Subscribe to receive the latest news and updates
Vicinity Centres chief investment officer Michael O’Brien says DFO South Wharf has significant growth upside.
“DFO South Wharf is a high quality retail asset. With strong sales growth, low occupancy costs of 10.2% and specialty store sales per square metre of approximately $9200, we believe there is scope for further income and capital value growth,” O’Brien says.
This transaction is in line with our strategy of increasing our investment in the very successful DFO portfolio
“The asset will be further enhanced in the short term with the completion next month of the new multi- deck car park providing approximately 300 additional spaces.
“DFO South Wharf will also benefit from the development of a second hotel and the expansion of the Melbourne Convention and Exhibition Centre adjacent to DFO South Wharf, which is underway.”
Vicinity has been actively chasing DFO centres over the last 12 months.
In May it paid $55 million to take over the management of the business at DFO Brisbane, under a sublease from Brisbane Airport Corporation.
And just weeks earlier it entered into a $145 million agreement to with Perth Airport to build a DFO on airport land.
O’Brien says the South Wharf purchase was the latest move in Vicinity’s strategic targeting of DFO properties.
“This transaction is in line with our strategy of increasing our investment in the very successful DFO portfolio,” he says.