Wesfarmers expects to free up $400 million of capital after establishing a joint venture with unlisted property fund manager ISPT.
The joint venture, to be 75 per cent owned by ISPT, will acquire an initial portfolio of 19 Coles-owned shopping centres across Australia, with plans to acquire more as they are developed.
The portfolio is valued at about $532 million and the transaction will deliver proceeds to Wesfarmers of about $400 million.
The joint venture follows an increase in the number of freehold shopping centres developed by Coles in recent years.
The company became more active in this sector because traditional shopping centre developers struggled to obtain bank finance after the GFC.
Coles will retain a 25 per cent interest in the centres and continue to manage them.
Coles finance director Rob Scott said this structure ensured Coles retained flexibility and control over store layouts.
“The arrangement also affords Coles the opportunity to secure funding for our future store growth plans,” Mr Scott said.
Wesfarmers finance director Terry Bowen said the joint venture represented a continuation of the company’s strategy of releasing capital from its balancer sheet.
The group has a similar structure for its Bunnings stores, many of which are owned by the listed BWP Trust. Wesfarmers retains a 24 per cent stake in BWP Trust.
