Federation Centres (FDC), a popular mall operator in Australia has reportedly sold half its stakes in six malls to an investment firm, Challenger Ltd, for $579 million. FDC hopes to use the proceeds of the sale to fund redevelopments and renovations in the malls, according to several media reports.
The total value of all the malls is estimated to be around $1.15 billion and FDC will retain managerial authority. The malls including Bankstown Shopping Centre and Centro Toormina are scattered over various Australian states.
However, this is not the first sale deal for FDC. In 2012, it sold its stakes in three malls to Perron Group, a popular vestment firm and was also under talks of selling its share in five malls to Industry Superannuation Property Trust in February 2013, reports Businessweek.
According to the Australian, FDC is actively selling off stakes in assets as it hopes to reduce its debt facilities and fund the maintenance of the malls. The sale was negotiated by Jones Lang LaSalle.
"We believe it is prudent to reduce the size of our undrawn debt facilities given the strength of our balance sheet and current capital commitments, resulting in immediate and future cost savings," Steven Sewell, managing director of Federation Centres, said to the Australian.
"We have now agreed to extend our alliance to also include co-ownership of a larger group of other centers. The co-ownership strategy provides Federation Centres with the liquidity and balance sheet flexibility for the future funding of our redevelopment and enhancement program of our portfolio," he added in another statement.
The sale is a part of FDC's brand new business strategy. It hopes to reinvent its business model and focus on its existing properties and improve their quality. According to Stephen Bartholomeusz of Business Spectator, this new model has a lot of potential and is a futuristic business plan as it can help FDC expand its portfolio by continuing to recycle its assets with the same alliances and direct investors later.