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Retailer David Jones has entered a contract to divest its menswear store at 299 Bourke Street Mall in Melbourne to Newmark Capital for $121 million.
The deal includes a short-term leaseback while South African-owned David Jones redevelops its flagship store on the opposite side of the mall on 310 Bourke Street, to be transformed into an elevated retail destination under one roof.
Once that project is complete Melbourne-headquartered Newmark will be in a position to potentially reposition the acquired 2,247sqm site into a prestigious, mixed-use landmark asset in a tightly held area.
The deal was negotiated by CBRE's head of retail capital markets Simon Rooney, alongside JACX Property acting as transaction manager on behalf of David Jones.
"The highly unique offering of 299 Bourke Street attracted significant levels of international and domestic interest and enquiry, resulting in genuine bidder depth, reflecting one of the most competitive retail campaigns for an asset of this size and nature," says Rooney.
There were reportedly more than 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 buyer interest had been underpinned by ongoing investor confidence in Melbourne - the fastest-growing capital city in Australia, which prior to the outbreak of COVID-19 was forecast to become the most populous by 2026.
"We expect investors to continue to seek strategic, high-quality core investment opportunities that offer attractive return parameters in the current market and into the future," he adds.
"Strategic investment opportunities such as 299 Bourke Street, located at the heart of Melbourne's super prime pedestrian mall provides enormous scope and opportunity for Newmark to reposition the asset when David Jones vacate and relocate.
"Seldom do we get the opportunity to transact these types of investment opportunities."
David Jones CEO Ian Moir says the successful transaction of 299 Bourke Street and the pending redevelopment of 310 Bourke Street represent a significant milestone in the company's "flagship" strategy.
"The divestment of 299 Bourke Street Mall will allow us to focus on the optimisation of our larger 310 Bourke Street store and deliver a more cohesive and elevated single store experience in Melbourne's CBD while simultaneously paying down debt as part of our ongoing debt reduction strategy," says Moir.
"The redeveloped 310 Bourke Street, will be specially curated for our Melbourne customers with an emphasis on premium luxury and lifestyle brands across each of our categories."
"The purchase of 299 Bourke Street Mall highlights Newmark Capital's focus on building an unparalleled portfolio of assets. We continue to acquire strategically positioned properties which offer unique investment opportunities for our investors," adds Newmark Capital's Simon Morris.
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