Brickworks Marketplace Development and Acquisition
Charter Hall Retail REIT (ASX:CQR) (the REIT) today announced the joint venture formed in 2012 with a domestic institutional partner, known as Charter Hall Retail Partnership No.1 (CHRP1), has acquired land comprising the former Brickworks site in Torrensville, Adelaide South Australia for $7.55 million (100% interest) from Woolworths Limited (Woolworths). The land is the future site of Brickworks Marketplace, a shopping centre that will be constructed by Woolworths, with an estimated oncompletion value of $75 million (100% interest) subject to final leasing outcomes. The final price paid will be based on the achieved rents capitalised at 6.89%.
The construction is expected to complete in mid 2015 and the centre will comprise a new 17,300 square metre sub-regional shopping centre, anchored by a full line Woolworths supermarket, BIG W discount department store and Dan Murphy’s liquor store, and approximately 5,200 square metres of supporting retail specialty space which is currently being marketed for lease.
Woolworths will provide a twelve month rental guarantee over any specialty area that is vacant on completion of the centre. Woolworths and BIG W have each committed to new 20 year leases, with the Dan Murphy’s tenancy subject to a 15 year lease. On completion, Woolworths’ covenant leases will account for 70% of the gross lettable area and 49% of the base rent of the centre.
Fund Manager, Scott Dundas, said the centre is an important addition to the REIT’s $2 billion Australian portfolio and that the acquisition further strengthens the REIT’s earnings and Charter Hall’s relationship with Woolworths.
“Our focus is on continuing to strengthen and improve the quality of our Australian portfolio, and Brickworks Marketplace is a perfect fit for the REIT, with the centre servicing an established local community and providing much needed convenience based shopping to the area.
“The high proportion of base rent from Woolworths is in line with the REIT’s investment strategy of investing in long WALE leases to Australia’s major supermarket operators,” Mr Dundas added.
The centre will be positioned on a high profile site on the corner of South Road and Ashwin Parade. South Road is an integral North-South route in the metropolitan area and carries an estimated 50,000 vehicles per day.
This acquisition will be predominantly funded from the CHRP1 joint venture debt facility with the facility limit to be increased by $50 million to $235 million1 (100% share). This facility will also be extended by one year to July 2018, at existing pricing.
1 Credit approved, subject to documentation
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