CFS Retail Property Trust will pay A$498 million ($473 million) to acquire four shopping malls owned by Direct Factory Outlet in Australia.
The real estate trust that invests in Australian shopping centers today completed a deal to buy one mall in Sydney and three in Melbourne from the outlet chain, Sydney-based CFS Retail said in a statement to the Australian stock exchange.
The trust will fund the purchase through a A$540 million institutional equity raising, it said in the statement. Austexx Pty Ltd., DFO’s Melbourne-based parent, has put its A$1.5 billion of shopping outlets up for sale to pay off debt accumulated before the global financial crisis.
“This is a unique opportunity to enter an increasingly important, yet immature retail format and sub-sector in Australia,” Michael Gorman, fund manager at CFS Retail, said in the statement.
CFS Retail, managed by Colonial First State Property Retail Pty Ltd., will buy DFO shopping malls in Homebush in Sydney, South Wharf in the Docklands in Melbourne, and at domestic airports in the Melbourne suburbs of Moorabinn and Essendon, it said in today’s statement.
The South Wharf purchase is contingent on CFS Retail’s joint venture partner The Plenary Group’s ability to get financing to double its interest to 50 percent, according to the statement.
“The investment tide is clearly turning,” Simon Rooney, head of retail investments at real estate broker Jones Lang LaSalle Inc., who is handling the DFO portfolio sale, said in an e-mailed statement. Local property trusts “ have largely re-emerged as buyers due to extensive capital raising over the past two years, while many superannuation funds are also in a position to buy again because their portfolios have rebalanced and they are no longer overweight in property.”
CFS Retail will offer eligible Australian and New Zealand unit holders a unit purchase plan following the institutional raising, with expected proceeds of as much as A$10 million used to retire debt, CFS Retail said.
CFS Retail shares have been suspended from trading since Sept. 22 after closing at A$1.95.