Commercial property group Vicinity Centres has exchanged unconditional contracts to acquire the remaining 49% interest of Chatswood Chase in Sydney’s North Shore for $307 million.
The transaction is expected to settle on March 15, 2024.
Chatswood Chase has over 50 fashion retailers, including Zimmermann, Peter Alexander, Incu and M.J. Bale, alongside department store David Jones and low-price retailer Kmart.
Vicinity’s CEO and MD Peter Huddle said retail assets such as Chatswood Chase are key pillars in the group’s strategy towards resilient income growth and sustained value accretion through cycles.
While Vicinity retains the right to nominate another purchaser prior to settlement, Huddle said the group has taken full control and will expedite its board-approved redevelopment of the asset - valued at $620 million.
This involves upscaling Chatswood Chase’s upper floors.
“Our plans for Chatswood Chase reimagine a contemporary mini-Chadstone, incorporating a significant luxury retail component combined with the very best of Australian-designer retail as well as athleisure, technology and new to market concepts that we know our customers and retailers want,” Huddle said.
“We have worked hard to de-risk the development, having already secured more than 45% of the income and to the maximum extent possible in this environment, mitigated construction costs risk.
“Importantly, we expect the project to deliver a stabilised yield greater than 6% and an unlevered IRR greater than 10%, with the stabilised valuation of the redeveloped asset to capture more than $200 million of profit upside.
“We will commence early works shortly, with the main construction to begin in March next year and the project will be completed ahead of Christmas 2025.”
Huddle said household incomes in the surrounding area of the shopping centre are 32% above the Sydney average, and is proximate to bus, rail and metro transport.