Melbourne, Nov 9, 2005 AEST (ABN Newswire) - Centro Properties Group (ASX: CNP) announced today a joint venture with Leda Holdings ("Leda") of approximately $450 million for the Hyperdome Tuggeranong regional shopping centre, ACT ("Tuggeranong") and Centro Hervey Bay sub regional shopping centre in Hervey Bay, Qld.
Centro will invest $195.6 million (pre acquisition costs) to acquire 50% of Tuggeranong on an effective yield of 6.25% after acquisition costs. Mr Brian Healey, Chairman of Centro said, "This latest investment is another example of Centro's continued ability to source quality domestic assets, particularly as strong investor demand for Australian shopping centres continues.
Retail property in Australia has been increasingly recognised as a preferred investment category for some time, and assets such as Hyperdome Tuggeranong, particularly being a quality regional shopping centre asset, are scarce and keenly sought." The investment represents a continuation of the relationship between Leda and Centro. The transaction increases Centro's assets under management by about A$400 million, with Centro taking over property management for Tuggeranong and retaining these services at Centro Hervey Bay.
Leda will also invest $50 million in one of Centro's managed funds, the recently launched Centro Direct Property Fund International ("DPFI"). Mr Bob Ell, Chairman of Leda stated, "Leda and Centro have a successful history together and this represents a good opportunity for organisations with similar investment strategies to capitalise on the skills that they possess. Leda's investment in Centro's DPFI will provide a significant diversification of our direct property investments to now include this well spread US retail property exposure. The provision of this quality opportunity was an important alternative investment for us." Mr Andrew Scott, Centro Chief Executive Officer said, "Centro is very pleased to be able to expand the relationship with Leda, a respected property owner and developer in the Australian market, with these new joint ventures. Centro is also pleased to take on the property management and leasing responsibilities for both Tuggeranong and Centro Hervey Bay, with any future development activities at the centres to be completed jointly."
Hyperdome Tuggeranong is a two level regional shopping centre and the major retail component located in Tuggeranong, ACT, approximately 20 kilometres south of the Canberra CBD. Tuggeranong is one of four designated town centres in Canberra, and is strategically located to serve residents throughout the southern region of the ACT. Leda purchased the greenfields site in the growing Tuggeranong Valley in 1985 for the construction of the centre. The centre has a total gross lettable area of approximately 67,000m2 and comprises anchor retailers, Myer, Kmart, Target, Woolworths, Coles and Hoyts together with approximately 205 specialty retailers. With a sound track record in the ownership and management of regional shopping centres, including Centro Galleria, Centro Bankstown and Centro Colonnades, Tuggeranong provides another opportunity and greater geographic diversification to Centro's managed portfolio by increasing its NSW/ACT exposure to 31%.
The 50% interest of Centro Hervey Bay was joint ventured at $29.1 million, $1.9 million above book value and at a pre acquisition cost yield of 6.6%. Centro Hervey Bay is a single level sub-regional centre with GLA of approximately 16,000 square metres. The centre is anchored by major retailers, Target, Action and The Warehouse and includes approximately 45 specialty retailers. The property includes over 5 hectares of land available for future development. Mr Scott added, "As part of our ongoing relationship with Leda, we are also delighted that, consistent with general investor trends, Leda is looking to diversify its property exposure by investing in international direct property, and has chosen to obtain this international exposure through Centro's Direct Property Fund International.
The DPFI, launched in September 2005, has assets of $179 million with interests in three of Centro's US property syndicates." Centro's investment in the joint venture will be funded by a mixture of debt and equity, with an institutional placement of approximately $100 million to be underwritten by JPMorgan Australia Limited. Consequently, the impact of the transactions on Centro's gearing levels on a post placement look through gearing basis, is forecast to be 36% by half year end, at the lower end of Centro's preferred range. Mr Scott stated, "These transactions continue to demonstrate that accretive acquisitions under Centro's risk managed growth strategy, add value to Centro investors through the increase in distributions and risk diversification while maintaining prudent gearing. The earnings impact of these transactions is expected to provide a sustainable increase of 0.1 cent per stapled security to distributions for the financial year ending 30 June 2007. As previously announced to the market in June 2005, Centro distributions for the year end 30 June 2006, are expected to be 36.5 cents per Centro security."
About LEDA
Bob Ell's Leda is one of Australia's leading private property investment and development companies and has been responsible for development of over 360,000m2 of quality retail property including the Tuggeranong Hyperdome. Leda's 50% investment in Centro Hervey Bay will add to its existing retail portfolio which includes Morayfield and Victoria Point shopping centres, both of which have recently undergone major extensions by Leda. Some of Leda's recent activities include the current development of a regional shopping centre in Ipswich, Qld and the acquisition of a 60,000m2 site in Nowra on the NSW South Coast for the future development of a sub regional centre.
Contact
Mr Andrew Scott
+ 61 3 8847 0033 or +61 419 548 068
or
Mr Graham Terry
+61 3 8847 0010 or +61 419 558 409.
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