This article is from the Australian Property Journal archive
MELBOURNE-based Nikos Property Group has forged its second partnership with Vicinity Centres, acquiring a 50% interest in the Broadmeadows Central shopping centre from the ASX-listed retail landlord for $134.5 million.
The transaction – which arrives amid a broader dry spell for major deals in commercial real estate – follows last year’s $138.2 million acquisition by Nikos Property Group of a 50% interest in the Colonnades Shopping Centre in Adelaide, also from Vicinity.
The deal was struck at a premium to Vicinity’s book value, and could prove an important guide at a time of price rediscovery. MSCI head of Pacific real assets research, Benjamin Martin-Henry has said price discovery has become more and more challenging for both buyers and sellers, resulting in restraint in the market.
Broadmeadows Central is a 129,703 sqm regional centre located 19 kilometres north-west of the Melbourne CBD. It is anchored by Kmart, a triple supermarket offering of Aldi, Coles and Woolworths, alongside Hoyts Cinemas and more than 115 specialty stores.
Vicinity will continue to provide centre management and leasing services, as well as manage any future potential development activity.
“We are delighted to further strengthen our strategic partnership with Nikos by adding Broadmeadows Central to our existing joint interest in Colonnades Shopping Centre in South Australia,” said Vicinity’s CEO and managing director, Peter Huddle, said:
“We are confident that our collective expertise in retail property investment will drive sustained returns for both parties.
“In the immediate term, the sale will further strengthen our balance sheet with the proceeds expected to be used to repay bank debt, resulting in a circa 70 basis point reduction in gearing.”
CBRE’s head of retail capital markets – Pacific, Simon Rooney negotiated the off-market sale. Rooney said the deal continues the trend of private investment groups, syndicates and, to a lesser extent, institutional investors taking out passive stakes in retail assets alongside institutional managers.
“This allows institutional partners to reduce gearing and maximise the use of capital while maintaining management fee income.”
Other recent examples include Telstra Super’s $120.5 million sale of a 50% interest in Sydney’s Carlingford Court to JY Group
Rooney said the Broadmeadows Central attracted interest from various parties, highlighting the continued appetite for well-located, professionally-managed centres in metropolitan locations.
“There is a continued bifurcation between these types of assets and centres in regional locations, albeit sub-regional centres that dominate their catchments are still highly sought-after,” Rooney said.
Capitalisation rates across the retail sector have jumped by more than 200 basis points, according to The Data App, driven by sub-regional and larger assets.
Offshore investors and private players driven by attractive asset pricing will dominate Australian retail real estate acquisitions throughout 2023, while AREITs will likely be net sellers, JLL says.
Vicinity is now moving to sell a 100% interest in the adjoining 33,500 sqm Homemaker Centre, through a CBRE expressions of interest campaign launching on Monday.
