Growthpoint Properties Australia is set to sell its Perth Woolworths distribution centre for $267.7 million, marking a significant milestone in its capital recycling strategy and expected to reduce gearing by 4%.
- Sale of Woolworths distribution centre for $267.7 million
- Asset held since 2009 with multiple expansions
- Expected unlevered IRR of approximately 12%
- Pro forma gearing reduction by around 4%
- Settlement contingent on expansion completion and FIRB approval
Growthpoint Executes Major Asset Recycling Move
Growthpoint Properties Australia (ASX:GOZ) has agreed to divest the Woolworths distribution centre located at 20 Colquhoun Road, Perth Airport, Western Australia, for a gross consideration of $267.7 million. This sale to Hesperia forms a key part of Growthpoint's disciplined capital recycling program, aimed at optimising its portfolio and capital efficiency.
Value Creation Over 15 Years
The leasehold property has been in Growthpoint’s portfolio since 2009, initially valued at $101.6 million. Since acquisition, the company has actively managed the asset, completing a 15,000 square metre expansion in 2009 and recently initiating a further 10,700 square metre extension. CEO Ross Lees highlighted that the divestment "demonstrates the value we create through active asset management," expecting an unlevered internal rate of return of approximately 12% from the investment.
Financial Impact and Conditions for Settlement
Proceeds from the sale are anticipated to lower Growthpoint’s pro forma gearing by about 4%, providing balance sheet flexibility. However, settlement hinges on the completion of the ongoing expansion project, Foreign Investment Review Board (FIRB) approval, and other customary conditions. The transaction is targeted for completion in early 2027.
Strategic Positioning Amid Strong Portfolio Metrics
This divestment aligns with Growthpoint’s broader strategy of capital recycling, which has supported its recent financial resilience and sustainability commitments. The company has maintained high occupancy rates and stable funds from operations while advancing its Net Zero emissions target ahead of schedule. The sale of this industrial asset complements Growthpoint’s ongoing efforts to optimise its portfolio composition and capital structure.
Bottom Line?
Growthpoint’s sale of a long-held industrial asset underscores its focus on capital efficiency, but execution risks remain until expansion and approvals conclude.
Questions in the middle?
- How will the completion of the expansion influence the final sale terms and timing?
- What impact will the gearing reduction have on Growthpoint’s borrowing capacity and future acquisitions?
- Could Growthpoint pursue further divestments in its industrial portfolio following this transaction?