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Vicinity Centres (ASX: VCX) has exchanged contracts to acquire Eastern Creek Quarter (ECQ) in Western Sydney from Frasers Property Australia for $400 million, lifting the retail landlord's exposure to metropolitan Sydney and bolstering its portfolio of outlet centres.
Located in the heart of Western Sydney's industrial and residential growth corridor, ECQ is a hybrid retail asset comprising a recently opened 20,000sqm Outlet centre, an integrated 10,000sqm traditional retail shopping centre and an.11,000sqm large format retail centre.
Developed by Frasers Property Australia across three stages since 2020, the centre serves a growing catchment of about 1.2 million residents.
The property sits within the rapidly expanding Western Sydney corridor, a region underpinned by significant infrastructure investment including the Western Sydney International Airport and surrounding aerotropolis precinct.
Vicinity CEO Peter Huddle says the deal reflects a disciplined approach to capital deployment.
“For some time now, Vicinity has been a selective, timely and disciplined acquirer of strategically aligned retail assets," says Huddle.
"As a hybrid retail asset that is strategically located and boasts a new Outlet centre with future development opportunity, acquiring ECQ makes sense for Vicinity.
“Furthermore, by intentionally maintaining a conservative but flexible capital structure, we have been able to once again, capitalise on an attractive acquisition opportunity,that will enhance earnings resilience and strengthen our future income and value growth profile.”
The acquisition will be funded through Vicinity's existing debt facilities, with the company flagging that gearing is expected to increase by about 200 basis points on settlement.
Cameron Leggatt, the CEO of Frasers Property Australia, says Eastern Creek Quarter has "quickly grown" into a premier mixed-retail destination, describing the property as a "genuine community asset, a testament to strong partnerships and considered development".
"Vicinity Centres is a high-quality, Australian-based operator and we are confident in the future they will build at ECQ for the tenants and customers who have made it what it is today," says Leggatt.
“Consistent with our capital recycling strategy, the successful sale of ECQ positions us to pursue new opportunities in large-scale, mixed-use developments across our core eastern seaboard markets, assets where we can apply our placemaking and community-building expertise at scale."
Frasers completed the first-stage ECQ Shopping Centre in 2020, anchored by a full-line Woolworths and supported by dining and everyday retail, while stage two, ECQ XL which comprises large-format retail was completed in 2022.
ECQ Outlet, which opened in March this year, is Greater Western Sydney’s first dedicated outlet centre, featuring over 100 brands, 18 dining destinations and 1,100 additional car spaces.
The property was jointly marketed by CBRE and JLL on behalf of Frasers property Australia.
Simon Rooney, CBRE’s Pacific head of retail capital markets, says the acquisition is a "highly strategic move" by Vicinity to acquire a modern hybrid outlet retail precinct.
"The acquisition by VCX was an astute market foray, in the face of significant market interest, presenting the rare opportunity to expand its highly successful DFO footprint and buoyed by the exceptional initial trading performance of ECQ’s brand-new outlet centre,” says Rooney.
“Outlet centres are traditionally tightly held assets and rarely traded, the most recent outlet transaction being the acquisition of a 50 per cent interest in Harbour Town Premium Outlets, which Vicinity Centres acquired in late 2021 for $358 million."
The acquisition of ECQ is expected to settle on 30 June 2026, subject to landlord consent for the assignment of underlying long-term ground leases.
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