Woolworths To Spin Off Properties Worth AUD1.4bn
News: Australian supermarket chain Woolworths will spin off its 69 shopping centres in Australia and New Zealand into a new property company - Shopping Centres Australasia Property Group. The move to spin off properties worth AUD1.4bn (US$1.43) will enable the firm to gain AUD850mn (US$870mn) in cash and improve its balance sheet. The move comes in the wake of growing competition from online rivals that have forced the firm to seek other options.
BMI View: Despite the Australian retail sector's short-term challenges, it cannot be denied that the industry remains a reasonably attractive proposition for industry players, as reflected in our compound annual growth rate forecast of 3.9% in mass grocery retail sales over 2011-2016. Domestic industry players have continued to pour in investments to secure their domestic foothold and rising competitive pressures from new market entrants such as Costco will stimulate further industry dynamism and drive headline sales.