On Tuesday, Citi reiterated its Neutral rating on Vicinity Centers (VCX:AU) (OTC: CNRAF) stock, maintaining a price target of AUD2.20. The reaffirmation follows recent news that Vicinity may be in the process of selling its Roselands Shopping Centre to HMC, as reported by the Australian Financial Review on September 30.
Although the deal is still undergoing due diligence and neither Vicinity nor HMC have made official comments due to its unconfirmed status, Citi anticipates that the completion of this transaction could fulfill a significant portion of Vicinity's aimed $250 million disposal target.
Vicinity's strategic maneuvering includes the acquisition of a 50% stake in Lakeside Joondalup and the remaining 49% of Chatswood Chase. This is part of the company's broader plan to reposition its portfolio, which has already seen the divestment of $550 million in non-core assets. The potential sale of the Roselands Shopping Centre is seen as a continuation of this strategy, with Vicinity setting its sights on divesting approximately $250 million more in the fiscal year 2025.
Three years prior, the Hong Kong-based JY Group had acquired a 50% interest in the Roselands Shopping Centre from Challenger for $167 million, a transaction that was finalized above the property's book value at the time. Vicinity's current stake in the center is valued at roughly $142 million, with the book capitalization rate standing at 6.75%.
The potential sale to HMC is part of Vicinity's ongoing efforts to streamline its asset portfolio. By shedding non-strategic assets and focusing on key properties, Vicinity aims to strengthen its position within the market. The completion of the Roselands deal would represent a step forward in achieving the company's fiscal targets and reshaping its investment focus.
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