Petrol station king Nick Andrianakos has embraced the shopping centre property recovery, taking a significant stake in a Melbourne complex.
Mr Andrianakos, who founded the Milemaker Petroleum portfolio of service stations and the Nikos Property Group, has taken a 50 per cent stake in Broadmeadows Central in Melbourne’s western suburbs.
The stake was sold by the listed Vicinity Centres for $134.5m, and the deal was struck above the book value at the end of December 2022.
The sale is a standout as most large commercial property transactions are being done at discounts, and office buildings are under pressure as many sales are yet to go through.
Under the deal with Nikos, Vicinity will keep running the centre and provide leasing services, as well as keep control of future potential development activity.
Vicinity chief executive Peter Huddle said the company had strengthened its partnership with Nikos by adding Broadmeadows Central to its existing joint interest in Colonnades Shopping Centre in SA. Mr Andrianakos last year took a 50 per cent interest in the centre for $138.2m.
“We are confident that our collective expertise in retail property investment will drive sustained returns for both parties,” Mr Huddle said.
The company will put the proceeds back into strengthening its balance sheet by repaying bank debt.
Mr Huddle said Vicinity had an active investment program where it was recycling and allocating capital to fund “accretive retail and mixed-use developments, and acquiring premium, destination assets”.
The company has been selling down assets which won’t provide as much value in future.
“Divesting interests in selected assets where we can realise attractive pricing enables us to execute our long-term growth priorities and deliver securityholder value whilst maintaining our flexible balance sheet and strong credit metrics,” Mr Huddle said.
Broadmeadows Central comprises a main shopping centre and a homemaker centre. The Nikos sale did not include the homemaker but it is also coming up for sale.
Citi said that, adjusting for the homemaker centre, it estimated the sale to be at a 4 per cent premium to book value with the deal at a cap rate below 6.68 per cent.
CBRE’s Simon Rooney negotiated the off-market sale and on the back of that deal will launch a campaign to sell the adjoining Homemakers Centre Broadmeadows.
Citi analysts were bullish about the positive impact on shopping centre values, and called the sale supportive for valuations as the market heads towards the June reporting season and valuation updates.
“We therefore expect cap rates to potentially move higher by a lesser extent than the market may be anticipating,” Citi said.
Other centres are also changing hands.
In one big trade, Alceon and CPRAM Investments are buying Smithfield Shopping Centre, in Far North Queensland for about $140m, from a Lendlease mandate client that has held the complex for more than two decades.
The listed property giant has a buyer on its massive Cairns Central as investors return to the larger end of the retail property market, and the deal worth more than $430m is likely to reset values.
Lendlease’s flagship unlisted retail property fund put the asset on the block earlier this year and has won interest from private Queensland real estate group McConaghy Properties.