Westfield owner Scentre sells $683m stake in Brisbane mall
Westfield operator Scentre Group has sold a quarter interest in a major Brisbane mall to a Dexus-run fund for $683 million, its latest effort to tap into fresh capital for its ambitious development plans
For Scentre, the transaction follows its long-held view that the most effective way of raising equity was to sell down some interest in some malls rather than pursuing an equity raising.
On the buy side, the deal is a much-needed win for Dexus, which has been battling challenges within its funds management business. In April, the company was forced to sell its $830 million half-stake in Sydney’s Macquarie Centre shopping mall.
Funds from that divestment, which was finalised a month ago, were used for the Brisbane deal announced on Wednesday.
The sale leaves Scentre with a 75 per cent interest in the mall, Chermside, and it will retain operational control.
Scentre chief executive Elliott Rusanow said the sell-down in Brisbane vindicated the financial strategy it had adopted as it navigated the challenges of the pandemic period. Instead of raising capital when the stock was under pressure, thereby diluting existing shareholders’ interest, the malls giant had bought time by raising various forms of debt.
As investment interest returns strongly to the malls market, Scentre has moved on with the next phase of its financial strategy to fund plans to redevelop its real estate, including introducing housing. That involved bringing in joint venture partners on some of its wholly owned malls, effectively releasing equity back to its balance sheet.
“Today’s announcement demonstrates that what we’ve said around where we can source long-term capital is actually valid,” Rusanow told The Australian Financial Review.
Of the 42 Westfield malls around the country, Scentre owns 12 of them outright, worth around $20 billion. While there is no set strategy, were it to sell down half its interest, it would create $10 billion of assets to draw capital from.
“We’ve said for a long time that this is one of the main sources of equity funding for the group. Given our significant long-term growth opportunities, we would see this as being one of the key sources of capital moving forward,” Rusanow said.
Scentre has reaffirmed earnings guidance of 22.75¢ per security for the 2025-26 financial year, a 4.3 per cent lift on the previous year. Distributions are expected to grow by 2.5 per cent, to 17.63¢.
Around 20 minutes by car from Brisbane’s CBD, Westfield Chermside is Australia’s second-largest regional shopping centre by both volume of sales and size.
As part of the deal, Dexus said it would invest an additional $170 million into the fund it manages, Dexus Wholesale Shopping Centre Fund, taking its total investment to $300 million.
“This exclusive off-market transaction leverages our established relationship with Scentre Group to secure a market-leading asset for DWSF,” said Michael Sheffield, executive general manager for funds management at Dexus.
“Dexus’s co-investment underscores its conviction in the fund’s strategy and future potential.”
The deal represents a quick recovery for Dexus after it relinquished its stake in the Macquarie Centre mall, which was held in the same fund that has now acquired the Chermside interest.
Dexus had been in a dispute with its co-investors in the Sydney mall – UniSuper and Cbus Property – after they accused the real assets manager of inadvertently breaching a pre-existing agreement when it took control of the fund that held the half stake in the $1.7 billion mall.
The Supreme Court of NSW sided with the two industry fund giants in a blow to Dexus’ funds management aspirations.
