The decision by shopping centre operator, Vicinity to flog off more of its malls isn’t surprising given the sale late last year of 11 malls had no real impact on its weak returns which plunged more than 70% in the year to June and saw it cut its final distribution.
Shopping centre group, Vicinity will get rid of another $1 billion of marginal Australian shopping malls to a joint venture it is setting up with Singapore investor, Keppel Capital to manage a new wholesale property fund – Vicinity Keppel Australia Retail Fund (VKF).
Even though retail sales rose 0.4% in April which was a little stronger than expected, retail property investment trust Vicinity Centres Re is going ahead with plans to sell around $1 billion of its underperforming businesses.
Vicinity Centres (VCX) is streamlining its business, having recently undergone a merger with Novion and being formerly known as Federation Centres. The company will undertake asset sales of $750m to $1bn by the end of 2016.
The broker believes the threats from consumer weakness and online growth have been overplayed, and an announced 5% buyback and rise in net asset valuation from Vicinity supports this thesis. The broker upgraded to Buy last week.