Real estate investment trust, Growthpoint Properties Australia (ASX: GOZ) has entered into the contract with Woolworths Limited to facilitate the expansion of one of its key Distribution Centres in Australia. Following this news, the share price of the company decreased by 1.862 percent as on 4 January 2019.
Growthpoint Properties Australia is going to fund the expansion of Woolworths’s South Australian head office and primary Distribution Centre servicing South Australia and the Northern Territory at 599 Main North Road, Gepps Cross, South Australia, for a total consideration of $57 million.
The expansion is going to include an extension of the existing temperature controlled and ambient warehouses, construction of a new recycling facility and other ancillary improvements. The expansion of the distribution centre is expected to be completed in mid of CY 2020.
Growthpoint is funding the development, and it will get a coupon for the project costs as they are incurred at a yield of 6.75 percent. After the project is completed, the total project cost will be rentalised through a new 15-year lease over the property, which will include approximately 90,000 square meters of lettable area. Woolworth has appointed its development arm FABCOT Pty Ltd as the development manager of the project.
Growthpoint has also agreed with Woolworths to an early surrender of its lease at 120 Northcorp Boulevard, Broadmeadows, Victoria. It is expected the early surrender period will amount to approximately 1.5 years, however, the exact timing of Woolworths departure is yet to be confirmed.
Growthpoint also announced that it has agreed with Woolworths to an early surrender of its lease at 120 Northcorp Boulevard, Broadmeadows, Victoria which will provide an opportunity to Growthpoint to explore the development options for the 25 hectares of the industrial site.
As per Growthpoint’s Managing Director, Mr. Timothy Collyer, the management of the company is delighted that Woolworths has chosen Growthpoint to expand at 599 Main North Road, Gepps Cross due to its significant locational benefits from a logistics and supply chain management perspective. He also told that the company is looking forward to working with Woolworths on the Gepps Cross expansion and supporting their future plans for growth.
Currently, Growthpoint is having a Total property portfolio value of $3.7 billion, and it is aiming to grow its portfolio over time. The company has set is FY 2019 distribution guidance at 23.0 cents per share.
In December 2018, the company announced the resignation of its Chief Operating Officer (COO) Mr. Aaron Hockly which will effective from 13 April 2019. Recently, the company announced the total distribution of 11.4 cents per stapled security which is expected to be paid on 28 February 2019.
Meanwhile, the share price of the company increased by 3.52 percent as on 3 January 2019. GOZ’s shares traded at $3.690 with a market capitalization of circa $2.74 billion as on 4 January 2019 (AEST 12:44 PM).