Vicinity sells suburban Perth shopping centre to Realside
Property investor Realside has struck a deal to buy Maddington Central, a shopping centre located 17 kilometres from Perth’s central business district, from listed landlord Vicinity Centres for $107 million. Now, it’s seeking equity backers to come in on the investment.
Street Talk understands potential investors have been told Realside has secured the investment in an off-market trade at a small premium to the $97 million book value. However, the acquisition price is a 40 per cent-plus discount to the land and replacement value, while also being lower than Vicinity’s $122 million peak valuation for the asset.
Realside boss Linda Rudd, a former partner at Knight Frank Australia, has been meeting with high-net-worth types, alongside founder Mark Vonic, who was previously the chief investment officer of Primewest. The book is slated to shut on May 8.
Fund-raising documents state a base case scenario of 8.5 per cent annual cash yield and 15.5 per cent internal rate of return over a five-year holding period.
Returns could be juiced-up by the asset’s circa three hectares of vacant land, with wide zoning that could house build-to-rent developments, logistics, a childcare centre, gym or a medical centre.
Daily needs
The sub-regional mall was built in 1980, last refurbished in 2020, and sits on 13 hectares of land. Key tenants Woolworths, Coles and Kmart which have an average WALE of greater than eight-years underwrite $207 million in moving average turnover. Coles, in particular, is in discussions to sign on for another 10 years, according to the fund-raising documents being shown to investors.
Prospective backers have been told it is a well-timed acquisition, with yields forecast to tighten from 2025. On infrastructure tailwinds, the documents noted its location is less than 600 metres from Maddington train station which is expected to be among the beneficiaries of WA’s $11 billion Metronet program.
Maddington’s approximate 220,000 main trade area population is roughly twice that of its peers in sub-regional shopping centres, which offer the highest average yield across opportunities in other sectors.
It’s a small deal for Vicinity, which has a total portfolio value of $14.36 billion, but should show up in its June 30 reporting.
The deal comes after Vicinity sold another suburban Perth shopping mall, Dianella Plaza, at a 5.9 per cent premium to book value.
The buyer, WA-based property manager Greenpool Capital agreed to pay $76.3 million in December and settled in March.
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