Woolies looks at selling Australian centres

Woolworths, Australia's biggest grocer, is considering selling distribution centres valued at up to A$1 billion ($1.1 billion) to raise money, after spending A$3.8 billion on acquisitions in the past year.

Woolworths has hired JPMorgan Chase & Co to advise on the possible sale of 11 of its 32 distribution centres, said Peter Thomas, general manager of Sydney-based Woolworth's property unit.

"We consider from time to time whether we should continue to hold assets, or whether we should lease them and employ our money elsewhere," he said.

The company had not made a decision about the sale yet and no talks had been held with possible bidders. The sale would be worth between A$800 million and A$1 billion, said Thomas.

"Clearly, with the amount of real estate we're talking about, there would be a part of the market that would have an interest, and the capacity to take it on."

Scott Marshall, an analyst at Shaw Stockbroking in Sydney, said Australian real estate investment trusts such as GPT Group, Stockland, ING Industrial, DB REEF Trust or Mirvac Group might be interested in bidding for the centres.

"You've got high-quality assets with a high-quality tenant, and if you were to structure say a 15-year lease with options for extensions, it could be low-risk and attractive," he said.

Woolworths last year paid A$1.3 billion for pub owner and liquor retailer Australian Leisure & Hospitality, and in May agreed to buy Foodland Associated's New Zealand supermarkets for A$2.5 billion.

Coles Myer, Australia's biggest retailer, yesterday announced deals for distribution centres in Sydney, Melbourne and Adelaide.

Macquarie Goodman Group will develop the A$238 million centres in Sydney and Adelaide, which Coles Myer will rent for at least 20 years.

General Property Trust will develop the A$100 million Melbourne site, which will also be leased for 20 years by Coles.

- BLOOMBERG