Vancouver-based Lotus Capital Corp. has purchased its first retail centre in Kelowna, calling the city one of Western Canada’s strongest secondary markets. 

The company, which has been boosting its portfolio of necessity-based retail in Canada, closed a deal to buy Plaza 33. It’s an 86,000-square-foot retail centre located at 301 Hwy. 33 in Kelowna’s Rutland area. 

The shopping centre is on 4.61 acres and was built in 1970. It has an RBC branch and TD Canada Trust branch as tenants, as well as Save-On-Foods grocery store, Shoppers Drug Mart, a medical lab and an Okanagan Library Branch among others. 

The centre fits the company's preference for well-located, neighbourhood shopping centres with essential-service tenants, said Dan Dibadj, vice president of acquisitions.

A strong secondary market

"The Kelowna market is a great growth market," he told RENX in an interview. "We think it's one of the strongest secondary markets in Western Canada. So that was the rationale behind the acquisition."

He declined to share the purchase price of the property. Castanet reported last year that the site was listed for sale for an asking price of $37.5 million and that the City of Kelowna’s 2040 Official Community Plan would support development of a 12-storey building on the site. The property’s most recent B.C. Assessment value was $29.1 million.

Dibadj told RENX their plan for Plaza 33 is to continue operating it as a retail centre to benefit from its steady cash flow. 

"This is a very durable tenant mix, and... we saw that, just based on the traffic and the presence that the centre has in the community," Dibadj said. 

Building a retail portfolio and Choice acquisitions

About seven months ago, Lotus Capital acquired a package of grocery-anchored shopping centres from Choice Properties REIT in Eastern Ontario. 

The 292,000-square-foot portfolio included essential retail in Kingston, Cornwall, Rockland and Hawkesbury. 

The company said then that the acquisition complemented their growing retail platform — a key part of their national portfolio.

Each of the four properties are anchored by a grocery store including a No Frills at the Kingston location at 1030 Cloverdale Dr., and Your Independent Grocers at the Rockland centre at 2737 Laurier St. and the Hawkesbury centre at 1560 Cameron St. 

Brookdale Centre in Cornwall is the largest of the properties Lotus purchased among the package of properties. In addition to a Food Basics grocery store, it is also anchored by Dollarama, Scotiabank and Planet Fitness.

Avison Young, who brokered the transaction, said Brookdale Centre was 90 per cent leased when it sold. Other retailers include GameStop, Guac Mexi Grill, Kelseys, Penningtons, Play It Again Sports, Reitmans, Stacked Pancake House, The Beer Store, Tim Hortons and Tootsies Shoe Market amongst others.

Dibadj said centres like these with grocery tenants serve a daily need in the community that weather economic turbulence well. "So regardless of where you are in the economic cycle, this set of assets... performs, and it provides stability."

‘A diversifying economy’

In Kelowna, Lotus sees a diversifying economy. "There's education, there's industry, there's leisure demand," Dibadj said. "The population growth is positive, but now you're seeing businesses, you're seeing investments — and long term, we think it's a high growth market."

Quality grocery-anchored retail is one of the most attractive segments of the market, he said. "It's resilient. It has defensive characteristics. We're continuing to grow our platform, retail platform specifically, and we're looking for opportunities that we have conviction in; both the real estate but also the market."

Dibadj said this is their first acquisition in Kelowna. 

Lotus Capital Corp. holds a portfolio of industrial, commercial, multifamily and retail properties as well as development sites in B.C., Alberta, Ontario and in the U.S., according to its website.

Over its 30-year history, the firm has invested almost $3 billion across North America, representing approximately 14.5 million square feet of GLA.