Melbourne-based fund manager Newmark Capital has purchased the David Jones menswear store in the Bourke Street Mall for $121 million—transacted with a short-term leaseback to the troubled retailer.
The property at 299 Bourke Street was purchased with Newmark now likely to reposition the asset with loose plans in the works for an office scheme featuring ground floor retail.
CBRE’s Simon Rooney, who negotiated the sale alongside David Jones' transaction manager JACX Property, said that despite deal flow in the retail property sector sitting at a seven-year low, the highly competitive campaign drew a deep field of enquiry.
“The sale followed a highly competitive on-market sale process, with over 140 enquiries fielded and 15 bids received, representing a mixture of domestic and offshore investors, high net worth individuals, developers, and syndicate investors,” Rooney said.
“Located at the heart of Melbourne’s super prime pedestrian mall [299 Bourke Street] provides enormous scope and opportunity for Newmark to reposition the asset when David Jones vacate and relocate.”
The troubled department store had listed the large format store following a strong double-digit decline in sales amid the Covid-19 crisis.
In February, prior to the pandemic, David Jones said profits fell 57 per cent to $20 million in the December half due to heavy discounting, weak sales and slowing foot traffic.
In May, David Jones' South African parent, Woolworths Holdings, appointed investment bank UBS to run the rule over its property portfolio in order to reduce debt, which has lead to the sale of its flagship stores.
David Jones chief executive Ian Moir said the successful transaction of and pending redevelopment of 310 Bourke Street represented a significant milestone for its strategy following a $1.1 billion write-down on its valuation over the last two years.
The announcement caps a busy time for Newmark. Led by Chris Langford, a property veteran better known to many as a former player at Hawthorn AFL club, and co-founder Simon Morris, Newmark has put together an impressive $1 billion portfolio in just a few years.
Late last year the fund manger struck a deal to acquire a $51 million new large-format retail centre in Warragul in regional Victoria, anchored by Bunnings and Kmart.
Its other assets include The Como Centre, Brandon Park Shopping Centre, Tooronga Village Shopping Centre and Chadstone Homeplus Homemaker Centre.
Newmark is also transforming one of Melbourne's best-known retail sites, the Jam Factory on South Yarra's Chapel Street, set to become a $1.25 billion entertainment, shopping and office precinct.