Newmark Capital in talks for major Bourke St site amid investor scrutiny

Performance of the Bourke Street, Melbourne, Mecca store has “exceeded expectations”. Picture: David Caird

Newmark Capital – the property company run by former AFL Commissioner and Hawthorn player Chris Langford – is tipped to be in exclusive talks to buy a retail property site from the IFM-controlled ISPT, say sources.

DataRoom sources say that Newmark was trying to raise about $80m to $90m to fund the purchase of the Midtown building at 246 Bourke St.

Mr Langford declined to comment on suggestions Newmark was in talks with ISPT about acquiring its Bourke St property or that it was raising that figure.

It comes as the high-profile managing director has been once again forced to play down claims of poor investor performance at Newmark’s latest retail property development in Melbourne’s Bourke St that he says has “exceeded all expectations”.

Newmark Capital bought the former David Jones menswear store in Bourke St Mall in 2021 for $121m and it was earmarked to become Mecca’s flagship outlet.

Sources say it had gone over budget, leading to the value of investor’s units behind the project falling to 45c in the $1.

Mr Langford said costs had increased in line with other projects around the market that were launched before the global pandemic, but he said it was a success.

“(It was) completed months ago and Mecca has opened and it has exceeded expectations and is trading very well,” he said.

“Investors have stuck with us on that investment and we have been very pleased with its performance.”

Suggestions are Newmark is in exclusive discussions to buy the Midtown building at 246 Bourke St from the IFM Investors-controlled ISPT. Sources believe that the building is up for sale for $165.2m.

Newmark Capital previously managed an Australian listed real estate trust but it was the subject of a buyout by Bunnings landlord BWP Trust last year for $247m in a scrip deal.

At the time, some of Newmark’s dissatisfied investors prepared to call a meeting to install a new manager at the target fund, The Australian reported at the time.

Euree Asset Management, which had an almost 3 per cent stake in the Newmark Property REIT, received the share register and planned to call a meeting to replace Newmark and keep the trust listed on the sharemarket.

Euree property director Winston Sammut wanted to secure a new manager that would keep the trust going, rather than pursue the merger or even rapidly sell off the assets.

Mr Sammut said Newmark, also controlled by businessman Simon T. Morris, had been “more intent” on selling the management rights than looking after investors’ interests.

Mr Langford told investors in the Newmark trust at its results that its “solid performance” was in line with guidance and underpinned by the quality of the its portfolio.

“Given continued market uncertainty and the challenges facing the REIT sector, the BWP merger proposal is a highly attractive offer for NPR security holders,” he said at the time.

Mr Langford said the manager was focused on unit holder returns.