The Scentre Group (ASX: SCG) share price is pushing higher in afternoon trade.
The shopping centre-focused property group's shares are up almost 1% to $3.88 at the time of writing.
Why is the Scentre Group share price pushing higher?
Investors have been buying the company's shares today after it announced the acquisition of a 50% interest in Garden City Booragoon, Perth for $570 million. This is inclusive of long-term property management, brand, and development rights.
Booragoon was wholly owned by the AMP Capital Diversified Property Fund, which will now become Scentre's 50% joint venture partner.
Scentre Group's CEO, Peter Allen, said: "We are excited to expand our operating business by adding the rebranded Westfield Booragoon to our leading Living Centre portfolio. Opportunities to purchase the best assets like Booragoon are rare. This acquisition follows the transactions we executed earlier in the year which released $2.1 billion of capital allowing us to pursue strategic and long-term value creating opportunities such as this one today."
Westfield Booragoon.
Westfield Booragoon is located approximately 13.5 kilometres south-west of the Perth CBD in a trade area with a population of more than 500,000.
Its trade area is very strong, with total annual retail expenditure per capita 19% above the Perth average. The trade area is comparable to the company's Bondi, Miranda, and Doncaster centres.
This centre is home to retail favourites such as Apple, JB Hi-Fi Limited (ASX: JBH), Myer Holdings Ltd (ASX: MYR), Woolworths Group Ltd (ASX: WOW), and Zara. It is classed as one of Perth's major activity centres and presents significant redevelopment opportunities.
The company will now commence pre-development work for a new development scheme in order to create long-term value for the co-owners.
Due to this news, the company has decided to defer the expansion of Westfield Stirling for the time being.
Financial impact.
The transaction is expected to be marginally accretive to Scentre's earnings from 2020 and will increase its gearing to 31.7%.
In the meantime, Scentre has reconfirmed its forecast funds from operations (FFO) growth per security for FY 2019 of 0.7% and distribution guidance of 22.6 cents per security.
