This article is from the Australian Property Journal archive
THE CFX Retail Property Trust led consortium will breathe new life into the Myer Emporium in Melbourne with a spectacular $500 million makeover after sealing the $605 million purchase yesterday.
The consortium including CFX, the Singapore Government’s GIC Real Estate and The Myer Family Company has finalised negotiations with Myer Pty Ltd and has exchanged contracts to acquire the iconic Myer Melbourne site fronting Bourke and Lonsdale streets.
As part of the consortium arrangements, CFX, GIC and MFCo will own the Bourke street site equally among the three parties, while CFX and GIC will jointly own the Lonsdale Street site.
The total initial outlay for the trust will be $276.6 million.
CFX’s fund manager Michael Gorman said the consortium will undertake a $500 million redevelopment of the site over a five year period, drawing experiences from Colonial First State’s other projects in Chadstone shopping centre in Melbourne and QueensPlaza in Brisbane.
CFX’s share of the redevelopment is expected to be $220 million.
The trust will be targeting an estimated initial yield of between 6% and 6.5% on costs including the acquisition of the site, while the Myer Melbourne project increases the Trust’s development pipeline to $1.7 billion.
The Bourke Street site will be occupied by Myer in a 41,000 sqm tenancy, which has agreed to a 21-year lease with four, 10-year options.
Whilst the Lonsdale Street site will consist of 30,000 sqm of specialty and concept store retail space with a further 7,500 sqm occupied by Myer, which will take up approximately 48,500 sqm of space in the Lonsdale and Bourke street buildings.
Gorman said provision will also be made for future office accommodation above the Lonsdale Street retail development.
MFCo’s managing director Graeme Sinclair said the Myer family has a continuous 100 year association with this property and we delighted to be part of the redevelopment of this iconic Melbourne landmark.
“Rarely in Australia is an opportunity presented to invest in such a prime CBD retail asset, and fewer still which provide the opportunity to deliver more than 70,000 sqm of space in a modern retail development.
“The trust’s share in the project will initially be debt funded, most likely in the form of hybrid security financing, with the aim of optimising returns for unitholders, with gearing to remain in the Trust’s previously published gearing bands which are between 25% and 30% with the ability to go to 35% in the short term.” Gorman said.
GIC RE’s president Dr Seek Ngee Huat agreed with Gorman, “We are excited for this rare opportunity to invest in a well-located retail asset in the city’s central business district, which is by far the largest single retail destination in Melbourne.
“We are fully committed to working with our partners to transform the Myer Melbourne property into a state-of-the-art shopping environment for the city’s residents and visitors,” he added.
Australian Property Journal
