Perron buys into Westfield Burwood; Industrial properties in high demand

Scentre Group (ASX: SCG) announced that it will sell a 50% interest in its Westfield Burwood Shopping Centre in NSW to Perron Group for $575M. Perron Group is a privately-owned group of companies with interests in commercial real estate and automotive distribution.

The sale price represents a 4.1% premium over the centre’s book value at December 2018. Westfield Burwood is one of the top 50 performing shopping centres in Australia and Scentre Group will use the proceeds of the sale to initially pay down debt. Scentre Group expects the transaction to be dilutive by 0.2 cents per security and has reaffirmed its guidance for FY19 distributions of 22.6 cents per security.

Across the other commercial property sector, the industrial sector remains hot with a number of recent transactions highlighting the demand in the market. In the past week we have seen some substantial activity, including:

  • APN Industria REIT (ASX: ADI) announced the acquisition of four industrial sites in Victoria for $38.25M. Three of the properties are located in Knoxfield, Victoria (82 Rushdale St and 3 & 4 Forbes Close) and were acquired on capitalisation rates of 5.75% - 6.50%. The other site (147-153 Canterbury Rd, Kilsyth) was acquired on a 7.25% capitalisation rate.

  • Stockland (ASX: SGP) also announced the acquisition of a 13.1hectare parcel of land in Gregory Hills in south western Sydney, NSW, with plans to develop the industrial site.

  • Charter Hall also looking to divest a five-asset portfolio for around $250M - $300M.

  • GPT Group is also looking to acquire three industrial sites in Sydney for around $120M from the AMP Capital Diversified Property Fund. This follows GPT’s announcement in February that it had also acquired logistics and development sites in Derrimut and Truganina, Victoria.

During the week, Goodman Group (ASX: GMG) also provided an update on its March quarter activities. The industrial focussed fund manager grew its global funds under management to $44.1B (from $42.9B in December) with a greater share of its sites leased to convenience-based retail logistics operations. We expect the market will continue to see strong interest in well placed industrial sites throughout 2019, as many institutional investors seek to increase their exposure to the sector.