Abacus Property Group (ASX: ABP) and Charter Hall's real estate investment trust (ASX: CLW) will each acquire a third of an interest in Myer's (ASX: MYR) Bourke Street building in Melbourne for a discounted price of $135.2 million a piece.
It comes two years after global funds manager TH Real Estate paid $151.3 million for a third of the flagship store from the Myer family, with today's acquisitions representing a 10 per cent drop in value for the property.
The remaining one third stake in Myer Bourke Street remains with property manager Vicinity (ASX: VCX), whose CFO Nicholas Schiffer resigned yesterday after just two years in the role during a tumultuous time for the retail property owner.
The property is one of the Melbourne CBD's best-known buildings, located prominently on the Bourke Street shopping strip, with a 61-metre frontage and nine levels of retail accommodation over circa 40,000sqm.
"It is pleasing to be able to take advantage of this intergenerational opportunity with longer term repositioning potential," Abacus managing director Steven Sewell said.
"This transaction aligns with our strategic priority of acquiring commercial assets in select locations where we see amenity and infrastructure improvements that we believe will ultimately translate to strong tenant demand.
"With the potential for a degree of repositioning, this is a great opportunity for the group, together with its partners, to implement active asset management plans and drive superior returns from the asset."
The devaluation of the Myer-occupied building comes just a few months after the retailer reported a revenue dive of 13.1 per cent to $1.4 billion in 1H21.
However, the company's bottom line was bolstered by $50.7 million in JobKeeper payments, resulting in the department store posting a 76 per cent increase to its interim profits for the December half.
CBD sales took a 32 per cent hit, with Myer blaming the impact on restricted CBD workforce levels, less tourism and subdued confidence from continued shutdowns.
On the flip side, the company saw a 71 per cent increase in its online sale to $287.6 million over the previous year with beauty and homeware items showing the sharpest rises.
The acquisition also comes just months after Myer announced it was permanently shuttering its store in Knox, Victoria as part of an ongoing cost-cutting strategy.
That closure came more than a year after the January 2020 closure of its Hornsby, New South Wales store and the January 2019 exit from its outlet in Logan, Queensland.
The devaluation of the Bourke Street Mall property comes in the context of a boom in online shopping in Australia spurred on by COVID-19 lockdowns and restrictions.
An e-commerce report from Australia Post recently detailed Australian online purchases in 2020 grew by 57 per cent.
In total, Australians spent $50.46 billion online, representing almost one in every six retail dollars spent during the year.
In Myer's context, online sales now represent 21 per cent of total sales, twice as much as a year earlier, on par with Premier Investments (ASX: PMV) at 20.4 per cent, but well below Adairs (ASX: ADH) at 37.1 per cent.
In addition to the Myer Bourke Street acquisition, Charter Hall Long WALE REIT announced two other acquisitions today: a 100 per cent interest in a distribution centre in Brisbane for $83.1 million and a Bunnings property in Perth for $49 million.
"The acquisitions are strategically located, high quality industrial and logistics and long WALE retail properties that are leased to national tenants," CLW fund manager Avi Anger said.
"This includes the Myer Bourke Street Mall property in Melbourne, which together with CLW's existing investment in the David Jones Castlereagh Street store in Sydney, represent two of Australia's most iconic CBD buildings."
Shareholders in both Abacus and CLW have responded positively to the announcements, with shares up 0.95 per cent and 1.37 per cent respectively.
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