Vicinity Centres seals $85m Qld sale

The John Gandel-backed retail property giant has revealed a sale to Asian tycoon Denis Jen.

The John Gandel-backed retail property giant Vicinity Centres has offloaded a Queensland asset to Asian tycoon Denis Jen for $85 million as it ramps up its development pipeline.

Vicinity yesterday unveiled the sale, the first in its near $1 billion of planned disposals, while also announcing plans to develop Western Australia’s first premium outlet centre at Perth Airport.

It will undertake that $145m project in a joint venture with Perth Airport Pty Ltd, and Vicinity chief executive Angus McNaughton said the group’s focus was on creating value across the retail spectrum.

“In line with this strategy, outlet centres remain a key focus and opportunity for Vicinity,” he said. Vicinity predecessor CFS Retail entered the sector with the purchase a portfolio of DFO centres in 2010 and they have generated an internal rate of return of 14.5 per cent since then.

“We had identified Perth as a prime location for a new DFO asset with its low representation of outlet centre space,” Mr McNaughton said.

Perth Airport’s executive general manager property, Steve Holden, said the group wanted to partner with the best company in the brand outlet space. Building is expected to commence in mid-2017, with completion forecast for 2018.

Vicinity said Indooroopilly sale was part of its broader asset disposal campaign, with the deal struck at a 31 per cent premium to the centre’s $65m book value. The deal, brokered by McVay Real Estate, showed a passing yield of about 5.9 per cent.

Mr Jen bought Melbourne’s Spencer Outlet Centre last year and also owns a portfolio of Queensland and NSW shopping centres.

Private equity house Blackstone and the listed Mirvac Group have also teamed up to bid on about $900m worth of centres owned by Vicinity.