Vicinity Centres buys 50 per cent stake in Uni Hill Factory Outlets, now to be known as DFO, and sells half-share of Lennox Village

Vicinity Centres is paying MAB Corporation $67.8 million for a half share interest in the Uni Hill Factory Outlets complex in Melbourne’s Bundoora.

MAB Corporation will retain the balance of the 11-year old centre, which was expanded in 2014.

At 2 Janefield Drive, Uni Hill Factory Outlets contains 19,580 square metres of lettable area tenanted to 99 occupiers.

Also with 900 car parks, it sits at the entrance of the master planned University Hill precinct, leading to a series of low and medium density housing estates developed by MAB Corporation and Sunland.

Based on the retail investment’s annual rental return, the sale is being struck on a 6.5 per cent yield.

Built in 2007, the centre was expanded in 2014. It includes 19,580 square metres of lettable area tenanted to 99 occupiers.

The Bundoora site abutting Plenty Gorge was formerly owned by Royal Melbourne Institute of Technology.

Under the control of Michael and Andrew Buxton’s MAB Corporation, the land has also made way for office, showroom and social infrastructure developments over the past decade.

“Uni Hill is a well-established outlet centre located in Bundoora, a strongly growing catchment in Melbourne’s northern suburbs, with population growth expected to average 2.0 per cent per annum over the next five years,” Vicinity Centres chief executive officer and managing director Grant Kelley said.

“With high specialty store moving annual turnover (MAT) growth of 4.1 per cent and low occupancy costs of 9.8 per cent, we believe there is scope to drive further income and capital value growth as we have done with our outlet centres across the portfolio.”   

Vicinity Centres will rebrand Uni Hill as DFO

Mr Kelley added, subject to receiving ACCC approval, Uni Hill would be “a great addition to Vicinity’s successful DFO platform” with the company becoming property and development manager of the asset and adopting the DFO brand for the centre.

The Bundoora news comes three weeks after Vicinity Centres and John Gandel announced they lodged plans for a $685 million extension and refurbishment of shopping centre Chadstone – The Fashion Capital, in Melbourne’s south east.

The Chadstone proposal includes five components, one of them being a nine level office.

Last month Vicinity banked $195.5 million selling two retail assets:

  • Corio Village in Geelong for $101 million, and
  • A 25 per cent stake in Brisbane’s Mt Ommaney Centre, for $94.5 million.

In September, Vicinity Centres announced plans for Australia’s largest eSports stadium at Melbourne’s Emporium complex.

Vicinity Centres also offloads Sydney’s Lennox Village for $31.5 million

Vicinity Centres also announced yesterday that on December 11 it sold a 50 per cent interest in the Lennox Village shopping centre, in New South Wales, to co-owner, Challenger.

The price, $31.5 million, was the June, 2019, book value.

Vicinity and Challenger unsuccessfully tried to sell this asset following a public sale campaign in June.

It was asking about $70 million during that campaign.

“The transactions reflect the continuation of Vicinity’s strategic portfolio refinement and focus on market-leading destinations, through the divestment of non-core assets and reinvesting those proceeds into value-accretive acquisitions and developments,” Mr Kelly said.

Lennox Village in Emu Plains, near Penrith (where there is a large Westfield), is about 60 kilometres west of the Sydney CBD.

Vicinity Centres also announced yesterday that it sold its half-share interest in Emu Plains shopping centre Lennox Village for $31.5 million to co-owner Challenger.

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Marc Pallisco

A freelance property analyst and journalist, Marc is a co-founder of realestatesource.com.au.

Marc Pallisco