Woolworths has announced a proposal to create Shopping Centres Australasia Property Group (SCA Property Group), a newly established Real Estate Investment Trust (REIT) owning a portfolio of quality Australian and New Zealand shopping centres.
Woolworths will transfer its current ownership of 69 neighbourhood, sub-regional and freestanding shopping centres to SCA Group. The portfolio, which have been independently valued by Cushman & Wakefield, Colliers International New Zealand Limited and Savills Australia, is worth $1.4 billion. All but one of the properties have been developed or redeveloped by Woolworths and a Woolworths Group business is the anchor tenant for each property.
Woolworths’ CEO Grant O'Brien said the creation of SCA Property Group is in line with company’s strategy to maximise shareholder value.
“Woolworths has determined that creating SCA Property Group is the best option to reduce the quantum of property held on the Woolworths balance sheet, make better use of Woolworths’ capital, and release value to shareholders,” he said.
“We are focused on growing earnings from our core retail business. Reducing the capital invested in property will allow Woolworths to focus on other growth options."
SCA Property Group will be an independent entity with its own Board and management team. Philip Clark will be chairman of SCA Property Group. Anthony Mellowes, currently head of asset management and group property operations at Woolworths, will become Chief Executive Officer of SCA Property Group on an interim basis. Kerry Shambly, currently manager of the capital transactions group at Woolworths will become Chief Financial Officer. Both Mellowes and Shambly will also be executive directors of SCA Property Group.
Historically, Woolworths enters into long term leases over its premises rather than holding property assets. During the Global Financial Crisis, Woolworths increased its involvement in the development of retail centres using its own balance sheet. Woolworths has decided to transfer certain property assets into a more appropriate vehicle allowing for better alignment with the core retailing business.