Westfield Trust acquires Sydney Central Plaza
10 March 2003
Westfield Trust has acquired Sydney Central Plaza (SCP) from Coles Myer Limited for approximately $400 million inclusive of transaction costs.
“The purchase of SCP follows Westfield Trust’s acquisition of Centrepoint in December 2001. SCP is a prime property and is expected to be a great addition to the Westfield Trust portfolio,” said Westfield Managing Director, Steven Lowy.
The 54,000 square metre shopping centre is located at the centre of Sydney’s CBD major retail precinct and is bounded by Pitt Street Mall, Market and George streets. It contains the flagship Grace Bros store over seven levels and a further 74 specialty retailers over two levels.
The SCP acquisition represents an initial yield of 6.25% after transaction costs. The transaction will be debt funded and is forecast to be accretive to distributions to the Trust’s unitholders for calendar year 2003 and beyond and is underscored by sound property growth fundamentals.
SCP is an important strategic acquisition for Westfield Trust. By acquiring SCP, Westfield Trust now owns two neighbouring properties at the apex of the major retail precinct in the Sydney CBD with a total combined area of 98,300 square metres, including 67,000 square metres of retail area and approximately 230 specialty stores.
The Trust’s combined investment in both properties is approximately $670 million, with a forecast yield of approximately 7.4% for the coming year.
The ownership of these two prime CBD retail properties provides the opportunity for a superior retail offering and increased economic value through operating synergies in management, marketing and leasing of both properties and enhances the development potential of Centrepoint.
Centrepoint was purchased with a view to substantial upgrading and expansion of the property. Westfield recently lodged a Development Application which incorporates plans for:- refurbishment and upgrade of the existing retail centre; expansion of the number of retail levels; an underground connection to Sydney Central Plaza; and the addition of three towers above the existing complex.
Following this transaction, the Trust’s gearing will increase from 28% to 31%. The maximum gearing policy of the Trust has now been increased from 35% to 40%. The Directors believe it is appropriate to increase the maximum gearing policy to this level in order for the Trust to take advantage of appropriate future growth opportunities.