Investment firm’s Myer flagship grab

MyerBourkestreetTH Real Estate has acquired one third of the iconic Myer flagship department store on Bourke Street Mall in the Melbourne CBD for $151.3 million, after striking a deal with Myer Family Investments in an off-market sale.

Myer Melbourne is one of the largest department stores in Australia, occupying just under 40,000sqm over nine floors with frontage to Bourke Street Mall of 61.40 metres. It is a historically significant structure having been constructed and operated as a flagship department store since 1914.

“There is still very robust demand from investors who are seeking to acquire major CBD retail assets given their defensive nature and potential to generate solid income growth through increased population density, infrastructure improvements and employment growth,” said Simon Rooney, head of retail investments, JLL who brokered the deal.

“In particular, Melbourne is expected to continue to experience strong population growth, having already overtaken Sydney in the rate of population growth and projected to be the first Australian city to reach 8 million residents.

“We continue to see offshore investors being very active in the Australian market. The inflow of offshore capital into retail assets reached a record high in 2015, with acquisitions of $2.5 billion across all shopping centre categories. Approximately $1.5 billion of retail assets have been acquired by offshore parties in 2016 year-to-date.”

Rooney said the sale adds to a series of CBD retail asset transactions that have occurred over the past 18 months. It follows the sale of the David Jones building at 77 Market Street Sydney for $360 million in August 2016, a 75 per cent interest in MidCity Centre, Sydney for $320 million in May 2016, a 50 per cent interest in World Square, Sydney for $285 million in December 2015, Rundle Mall and 80 Grenfell Street in Adelaide for $400 million in December 2015 and Myer Centre Adelaide for $288 million in May 2015.

“JLL has recorded approximately $1.1 billion in CBD retail transactions in 2016 year-to-date, which suggests we are on track to surpass the previous record of $1.2 billion reached in 2015,” said Rooney. “The imminent sale of St. Collins Lane in Melbourne, in addition to a number of other CBD shopping centre opportunities currently being marketed by JLL, amount to over $450 million in transactions volume which would exceed last year’s record.

“Investors continue to lower their return expectations for core assets which is resulting in further yield compression.

“The sale of Myer Melbourne continues the trend of very significant yield compression for core CBD assets, with the transaction recording a yield of just over 4.50 per cent. The sale of World Square, Sydney for $285 million reset CBD yield benchmarks in December 2015, at 4.45 per cent passing, reflecting one of the most competitive yields ever paid for a major retail asset in Australia.”

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