SCA Property Group, the Australian real estate trust spun off by supermarket chain Woolworths Ltd. last year, said it has about A$70 million ($62 million) of debt capacity available to fund its plans to buy shopping centers.
The company will see its gearing -- the ratio of its debt to assets -- rise to about 33 percent in a year when it acquires two centers being developed by Woolworths, from 28.9 percent as of June 30, Chief Executive Officer Anthony Mellowes said in a telephone interview. Under existing debt facilities, its gearing can rise to as high as 40 percent, he said.
SCA Property in June agreed to buy seven neighborhood centers in Victoria and Queensland for A$135.8 million, partly funding it with a A$90 million institutional equity raising. The company, which owns A$1.5 billion of shopping centers, most anchored by supermarkets, will focus on buying existing centers rather than starting its own new developments, Mellowes said.
“Most of the neighborhood shopping centers, which we would buy, are normally in the range of A$20 million to A$40 million for one,” Mellowes said, adding that the company would probably fund single acquisitions with debt. “If we do a portfolio, we would have to go out and raise more capital.”
Neighborhood centers are defined by industry group Property Council of Australia as local malls with one supermarket and about 35 specialty stores.
The Sydney-based company will consider refurbishments of its own malls over the next three years, Mellowes said. Potential candidates for smaller redevelopments include centers in Gladstone and Mackay in Queensland state, while properties with development land attached such as the North Orange mall in New South Wales and Ocean Grove in Victoria, could double in size, he said.
SCA Property on Aug. 28 reported a net loss of A$4.4 million due to one-time costs associated with its formation. It reported distributable earnings of A$38.6 million, or 6.6 Australian cents a share, and reiterated its forecast for earnings of 12.2 cents a share for the year to June 30, 2014.
The shares have risen 4 percent this year, compared with a 10 percent gain in the benchmark S&P/ASX 200 index.