Repositioning of retail assets continues
TH Real Estate has made its third major foray into the Australia retail property market with its acquisition of an interest in the Myer store on Melbourne’s Bourke Street Mall.
TH Real Estate, on behalf of parent company TIAA, has paid $151.3 million for a one-third interest in the department store. TH Real Estate, which now has a world-wide retail portfolio worth AU$42 billion, purchased Greenwood Plaza in North Sydney and Mount Ommaney in Brisbane in 2014.
Myer Melbourne was built in 1914 and was refurbished in 2011. The nine-storey building has an area of about 40,000 sqm with a frontage of 61.4m to Bourke Street Mall. It is understood the transaction will show an initial yield of just over 4.5 per cent.
“The underlying retail fundamentals and long indexed lease structure ensure sustainable income returns, making it a defensive long-term investment,” says Jayson Egan, head of Asset Management Australia at TH Real Estate.
Simon Rooney of JLL negotiated the off-market sale on behalf of Myer family investments. The sale signals the end of an era for the Myer family, with the iconic department store now being owned by TH Real Estate, Vicinity Centres and Singapore based GIC.
“This sale adds to a series of CBD retail asset transactions over the past 18 months,” says Rooney. “It follows the sale of the David Jones Market Street building in Sydney for $360 million in August, a 75 per cent interest in MidCity Centre, Sydney for $320 million in May, a 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.
“We see this high level of CBD retail investment activity continuing over the remainder of 2016 as owners seek to trade out of passive stabilised assets to redeploy funds into other investment and development opportunities.”
Elsewhere, Vicinity Centres has continued its divestment program with the sale of its per cent interest in Tuggeranong Hyperdome in Canberra. The purchaser, TTCT Investments, will pay $120 million, for the half share in the retail centre. TTCT Investments is owned by the Ell family, which through the Leda Group, owns the other per cent interest in the asset.
“The ongoing delivery of our asset divestment program, together with strong progress on our development pipeline and recent acquisitions, continues to reshape and enhance the quality of our portfolio,” says Michael O’Brien, chief investment officer at Vicinity Centres.