Vicinity Centres has cleared the way for the $620m Chatswood Chase redevelopment by buying out its co-owner's 49% share at some -6.5% below book value, Morgan Stanley notes.

The broker estimates the deal is -1.8% dilutive to Vicinity's funds from operations in FY25. By FY27, Chatswood Chase could make up
some 10% of Vicinity's portfolio by value.

Chatswood Chase looks tired at present, especially since Scentre Group ((SCG)) completed the upgrade of the adjacent Westfield in 2015, so in some ways, this redevelopment is strategically required, Morgan Stanley suggests.

Equal-weight and $1.95 target retained.

Sector: Real Estate.

Target price is $1.95.Current Price is $1.70. Difference: $0.25 - (brackets indicate current price is over target). If VCX meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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