JLL Colonnades
Colonnades Shopping Centre. Image supplied.
  • Will co-own the centre with Vicinity Centres
  • The shares was acquired for $138.2 million, signifying a 7% yield
  • Investment supply remains relatively constrained, says JLL Retail team

Nikos Property Group has acquired a 50% share of Colonnades Shopping Centres in Adelaide, following robust demand and liquidity in the market for major retail assets.

Nikos will co-own the mall with ASX-listed Vicinity Centres, who currently manage the 86,554 sqm regional shopping centre. Coles, Woolworths, Aldi, Kmart, Big W and Dan Murphy’s anchor the centre, which supports 12,700 sqm of non-retail uses that occupy over 42% of the total gross lettable area (GLA).

The centre is 26 kilometres south of the Adelaide CBD in the City of Onkaparinga, one of the largest metropolitan catchments in the South Australian capital.

“The opportunity to acquire a substantial shopping centre such as Colonnades that is professionally managed by Vicinity is a good opportunity for us and helps diversify our investment holdings,” said Nikos Property Group Chief Executive Theo Andrianakos.

“The sale of the Colonnades stake is consistent with the strategy of releasing capital for investment in other projects, including the proposed Cockburn Quarter development in Perth’s rapidly growing southern corridor,” added Ross Robertson, Perron Group Managing Director.

High yield

jll aerial colonnades
Aerial shot of the centre. Image supplied.

Nick Willis and Sam Hatcher of JLL’s Retail investment Team sold the centre on behalf of Peron Group via an expression of interest campaign that attracted international attention. The 50% sale price of $138.2 million reflects a yield of about 7%.

“The sale is a reflection of the continued theme of major capital partnering evident in the retail space as a result of the strength of the economic recovery, the stabilisation of retail valuations and an increasingly compelling investment outlook for the sector,” said Mr Willis.

“We continue to see a significant pipeline of opportunities for capital partners to participate in the retail recovery and repositioning of shopping centres to extract additional value, with the experience of leading managers and specialists in the sector.”

Nick Willis, JLL Retail

Mr Willis noted the sales process was highly competitive, even including maiden investors to the sector.

“South Australian retail assets are tightly held and are highly sought after given their relative scarcity and value compared to other major metropolitan markets like Sydney and Melbourne.”

Mr Hatcher added investment supply has remained constrained during the first quarter of 2022, following Q4 21 which was one of the largest transactions quarters ever recorded.

“The most aggressive capital continues to be focused on the convenience and large format retail sectors, however, with Colonnades and a number of pending transactions we are continuing to see investor confidence return for quality large regional assets,” he added.

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