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Woolworths deal given OIO approval

Woolworths has obtained Overseas Investment Office permission to set up a new entity to hold its local properties.

The deal is part of a group-wide restructure of Woolworths’ retail assets.

The Australian Stock Exchange-listed company with more than 3000 retail properties across Australia and New Zealand (161 here) is setting up two new unit trusts.

The ownership of 57 Australian properties and 14 New Zealand supermarkets will be transferred from General Distributors, a subsidiary of Woolworths, to two new unit trusts and leased back to Woolworths.  

The new unit trusts are Shopping Centres Australasia Property Group Retail Trust and Shopping Centres Australasia Property RE Ltd.

Initially, the unit trusts will be wholly-owned subsidiaries of Woolworths.

But eventually the units in the trusts will be offered to Woolworths security holders, retail investors and possibly by institutional investors.

The value of the properties involved is $218 million.

Woolworths is the largest retail company in Australia and New Zealand by market capitalisation and sales, and about 19th biggest in the world. In Australia it is also the largest liquor retailer and poker machine operator.

In New Zealand, Woolworths is represented by subsidiary Progressive Enterprises with the Countdown brand (104 outlets), Foodtown (20 supermarkets), SuperValue (franchised outlets) and FreshChoice (also franchised). A handful of outlets still operate under the Woolworths brand.

Citigroup is lead manager for the new investment offer.

More by Chris Hutching

Comments and questions

A sure sign they see no growth in real estate and meanwhile shoring up their balance sheet to ride the storm ahead.

The storm being the inevitable slowdown of China. If people haven't worked it out, businesses are only as good as the customers they sell to. Most of China's customers are looking quite sick now, having lived on credit for the past decade or so.

Governments can only generate short term growth, which is largely driven by election cycles. The chickens are starting to come home to roost.