SPH REIT has recently proposed to acquire a 50% stake in Westfield Marion Shopping Centre in Australia. To partially fund the S$670m acquisition, the REIT has raised $164.5m from a private placement.
The placement will issue 156.6m new units, at $1.05 per unit. The placement attracted strong participation from the institutional investors, and are expected to be listed on 2nd Dec.
1. The Upside of the Asset
The 1.5m square feet freehold property is the largest and the only super-regional shopping centre in South Australia. With the largest national supermarkets, department stores, and a 26-screen cinema, the mall has attracted more than 13m visitors every year. The mall enjoys an almost full occupancy rate at 99.3%.
The asset will bring in 5.6% net property income, with 1.6% yield accreditive to the portfolio. Most of the tenant leases are embedded with an annual rental escalation at the Consumer Price Index with an additional 2.0-2.5% spread.
2. Rental reversion will be crucial
30% of its leases are going to expire in the next 12 months. Investors should take note on the rental reversion closely.