Scentre bags US$390m stake in Perth mall from AMP Capital

Australian-listed Scentre group has bought a 50% stake in a Perth shopping centre from the AMP Capital Diversified Property fund for A$570m (US$390m), as it defers its Westfield Stirling expansion plans.

Scentre group and AMP Capital will become joint owners of the Garden City Booragoon centre, which will be rebranded Westfield Booragoon.

Located about 13km south-west of the Perth CBD, the centre offers more than 72,844 sq.m. of gross lettable area in a catchment area spanning more than 500,000 people.

“This acquisition follows the transactions we executed earlier in the year which released $2.1 billion of capital allowing us to pursue strategic and long-term value creating opportunities such as this one today,” said Scentre Group CEO Peter Allen.

The deal comes as retail investment volumes fell 53% year-on-year to A$1.2bn in Australia in Q3 2019, according to CBRE.

However, the broker anticipated investment activity to increase substantially in the final quarter with a significant number of transactions in the pipeline.

Scentre said the shopping centre’s current income had been impacted by previous redevelopment preparations, resulting in a current passing yield of 4.7%.

It said the deal reflected a stabilised economic yield of approximately 5.5%, with the company focused on improving income to its full potential.

Scentre Group will start pre-development work for a new scheme at the centre, as it stalled its expansion plans for the Westfield Stirling asset in Perth.

“As a result of this significant change to our Perth portfolio, as well as Booragoon’s future development opportunities, we have decided to defer the expansion of Westfield Stirling,” Allen said.

“The group intends to retain its ownership of Stirling in order to maximise its performance and preserve the development opportunity in the longer term.”

The centre has more than 160 stores, including Myer, David Jones, Kmart, Coles, Woolworths, Hoyts Cinemas, Apple and Zara.

Scentre and AMP Capital are joint venture partners on numerous assets, including Westfield Liverpool in Sydney, Westfield Southland in Melbourne, and Westfield Tea Tree Plaza in Adelaide.

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