Vicinity disposes shares in three shopping centres for $457m

Vicinity Centres (ASX: VCX) has exchanged unconditional contracts to divest 50 per cent stakes in three shopping centres, two in Sydney and one in Adelaide, for proceeds of $457 million, with the total sum representing a premium of more than 5 per cent to the properties' book values. 

Vicinity struck a deal to sell half of its full ownership of Elizabeth City Centre in South Australia to Nikos Property Group, while CBRE negotiated the sale of Vicinity's shares in Sydney’s Roselands Centre and Carlingford Court.

A spokesperson for Vicinity declined to confirm sale prices for each asset, but it is understood the Sydney sales went for a combined $287 million while the Adelaide deal was worth $170 million.

The divestment of Elizabeth Centre is expected to settle on 30 June 2025 and builds on an existing working relationship with Nikos, with which Vicinity already co-owns and manages Broadmeadows Central in Victoria and Colonnades in South Australia.

"We are delighted to further strengthen our partnership with the Nikos Property Group and continue driving mutual value via Vicinity’s expert retail property management platform," says Vicinity’s CEO and managing director Peter Huddle.

"Together, the Nikos family and Vicinity share significant experience in retail property investment, and I, together with the Vicinity team, look forward to delivering the next phase of growth and sustained returns on our shared portfolio of assets."

Meanwhile, the divestments of Roselands and Carlingford Court are expected to settle on 18 February 2025 and 1 April 2025, respectively. The remaining interests are held by Sydney-based JY Group.

"Today’s announcement demonstrates continued execution of our investment strategy, that is anchored by the curation of a stronger and more resilient retail asset portfolio, whilst preserving our strong balance sheet and credit metrics," says Huddle.

"With important developments in progress at Chadstone and Chatswood Chase and following the acquisition of Lakeside Joondalup in Western Australia in August 2024, we set a target of $250 million of asset divestments in FY25.

"Since then, we have been pleased with the level of interest in, and pricing offered for a number of our retail assets. Consequently, we have exceeded our initial divestment target by more than $200 million. On a standalone basis, the $457 million of proceeds from asset sales will reduce gearing by 230 basis points."

Real estate agency CBRE reports resurging buyer interest in shopping centre investment opportunities.

"Throughout 2024, we have seen offshore and domestic institutional capital re-enter the market, given the significant pricing and income recalibration, compelling returns, and high-quality opportunities on offer," says CBRE’s head of retail capital markets – Pacific, Simon Rooney.

"The overriding investor sentiment is that there’s an opportunistic window with limited, but increasing competition for assets, as motivated owners look to close out redemptions and reset portfolios throughout 2025."

He says the Roselands and Carlingford acquisition demonstrates the continued demand for quality metropolitan, sub-regional and regional assets with a focus on non-discretionary spending.

"There is particularly strong interest in assets which offer mixed-use development potential and strategic value-add opportunities," Rooney says.

Roselands Centre, situated 16km south of the Sydney CBD, was one of the city's first regional shopping centres and was reportedly the largest in the southern hemisphere on its completion in 1965.

Roselands Centre and Carlingford Court have a combined gross lettable area (GLA) of approximately 96,761sqm, generate exceptional centre turnover totalling more than $630 million per annum, and occupy significant high-profile metropolitan sites.