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The owner-manager of most of Australia's Westfield shopping centres has announced its second major asset sale in the space of six weeks, along with an $800 million share buy-back program.
Scentre Group (ASX: SCG) announced today it has disposed its Sydney CBD office towers to certain funds managed by New York-headquartered Blackstone for $1.52 billion.
The sale comes soon after Scentre's sold 50 per cent of its ownership in Westfield Burwood to Perth-based Perron Group for $575 million, effectively making that business a joint venture.
Scentre's CEO Peter Allen says these two transactions have released $2.1 billion of capital for the company to further pursue its strategic objectives.
"Our development of the Sydney Office Towers in 2011 and ongoing investment until now has created significant value for securityholders," says Allen.
"The transaction price represents almost $800 million in additional value created compared to our investment cost and has generated an unlevered internal rate of return of over 16% per annum for the Group.
"As a result of these transactions the Group is also announcing today its intention to commence an $800 million buy-back of SCG securities. This will allow the Group to enhance its return on equity while maintaining its very strong balance sheet position."
The disposal will be effected by way of the Group granting a 299-year leasehold interest to Blackstone over the office components located at 100 Market Street, and 77 and 85 Castlereagh Street.
Scentre Group will retain ownership of Westfield Sydney and Sydney Tower.
The company says proceeds from the transaction will initially be used to repay debt.
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