Scentre sells stake in Westfield Burwood shopping centre

Scentre will use the $575m from the sale of a stake in Sydney’s Westfield Burwood centre to repay debt.

Shoppers in Burwood Westfield shopping centre in Sydney.

Retail landlord giant Scentre Group has struck a deal to sell half of its stake in Sydney’s Westfield Burwood shopping centre to Perron Group for $575 million.

The centre in Sydney’s inner west is a strong performer, listed as one of the country’s top 50 shopping malls. Boasting 230 stores, including David Jones, Kmart, Target, Coles, Woolworths and Event Cinemas, Westfield Burwood receives more than 14 million visitors per year, with total retail sales of close to $500m.

Scentre will continue to manage operations of the centre’s gross leasable area of 63,248 square metres, valued at $11,591p/sqm.

The transaction saw Perth-based Perron Group pay a 4.1 per cent premium to the centre’s book value of $1.1 billion estimated in last year’s annual report.

Ross Robertson, managing director and CEO of Perron Group said the “quality asset” combined with a “quality co-owner” was the driver behind the Burwood investment.

“We are delighted to be co-owning Westfield Burwood with the Scentre Group, a property centre manager and developer whom we have the greatest respect,” Mr Robertson said.

“This acquisition is part of a strategy to consolidate the quality of the Perron shopping centre portfolio, which will now consist of joint or full ownership of 13 shopping centres across Australia.

It will be the first major transaction since the passing of Perron founder, Stan Perron, last year.

The Burwood deal is not the first joint venture the two companies have teamed up on. Perron has previously invested in 50 per cent of Westfield Woden in Canberra, Westfield Airport West in Melbourne and Westfield Geelong.

The private Perth company also has its own major commercial holdings, including Central Park in Perth CBD and 201 Elizabeth St in Sydney.

Scentre chief executive Peter Allen said the transaction highlights the value of Scentre Group’s platform of 41 Westfield living centres

“The proceeds will provide the group with further capital to pursue our strategic objectives of creating long-term value for security holders,” Mr Allen said.

Scentre has said the proceeds to repay debt.

The transaction is expected to be dilutive to funds from operations per security by approximately 0.2 cents per security over the full year, but Scentre’s forecast distribution remained unchanged at 22.60c per security.

Meanwhile, the Victorian government has approved the masterplan for Scentre’s $500m redevelopment of Westfield Doncaster in Melbourne.

An additional 43,000 of retail and 18,000 sqm of office space will be added to the shopping centre.

With AAP