Primewest is seeking to purchase two Perth shopping centres from Vicinity for another new trust.
In the biggest deal it is offering $63 million on Dianella Plaza at 366 Grand Promenade, about seven kilometres north of the city.
Developed in 1968 and renovated 18 years ago, it contains 17,239 square metres of retail space anchored by Coles, Woolworths and The Reject Shop and 50 specialty stores, surrounded by 922 car parks.
The initial return is nine pc (falling to an 8.85pc market yield).
The Dianella centre covers a low 24 per cent of the 7.3 hectare District Centre zoned site. Allowing for the car park and infrastructure, about 1.8ha could be immediately developed – Primewest identifying this part as having the potential to make way for a community-hub based investment with a library and childcare.
In another deal, the manager is seeking to acquire Victoria Park Central south-east of Perth for $25.3m – a buy it also describes as counter-cyclical and below replacement value.
If the deal goes ahead, the two assets would be retained by the Primewest Dianella Plaza and Victoria Park Central Trust which was launched to wholesale clients this week until December 21.
Victoria Park Central
Victoria Park Central, about 5.5 kms from town, is on 1.3ha also zoned District Centre (which allows a wide range of business usages and airspace redevelopment potential).
Woolworths is the only anchor – the 5825 sqm single-storey complex at 366 Albany Highway is designed with 26 specialty stores, one measuring 304 sqm, and four ancillary (kiosk/ATM/vending machine) spaces, too.
This investment returns annual rent of $1.88m.
Based on the market income ($1.77m pa), the yield is 6.99pc (story continues below).
Primewest Dianella Plaza and Victoria Park Central Trust strategy
Both shopping centres have a short Weighted Average Lease Expiry – two years at Dianella, and 3.1 for Victoria Park.
Non-discretionary and essential service businesses pay 86pc of the portfolio’s income.
Primewest’s investment strategy includes renovating both complexes and renewing tenants with imminent lease expiries at their current rent.
It will also aim to extend terms with both supermarkets – possibly refurbishing the Coles.
At Dianella, the manager intends to construct a large format retail investment and retirement village amongst other social infrastructure.
Primewest diversifies commercial portfolio in 2020
Last month the Perth investment house led by John Bond launched another entity – Primewest Property Income Fund (PIF) – with three childcare centres costing a total $17.5m.
Earlier this year Primewest unveiled its Australian Daily Needs Trust which has acquired several neighbourhood shopping complexes including some offered by Woolworths with a leaseback.
For it and other trusts in 2020 the landlord has additionally purchased rural car yards, suburban offices, retail investments and child minding facilities (including one last week in Melbourne’s Southbank not part of the PIF deal).
In August Primewest gave the Lamattina family $42m for a 385ha celery farm at the Mornington Peninsula town of Boneo – which shares the same postcode as Cape Schanck and is, with the north-west tip of Tasmania, said to have the world’s cleanest air.