The Warehouse Group has sold a large 1.4 hectare property in Auckland’s desirable Newmarket for $65 million, and will shut its store there next October.
The big-box retailer company, which is on a cost-cutting drive, said the proceeds would be used to reduce debt.
The purchaser of the site was not mentioned.
Once tipped for apartments, the site had resource consent for a $200m mixed-use development including a hotel, apartments, offices and retail.
READ MORE: * Retail expert questions The Warehouse property sale * Warehouse moves into apartments But The Warehouse has ditched plans to develop the site with a partner, following a change of chief executive and faltering sales.
The group’s half year net profit to January fell to $13.6 million, compared with $57.2m a year earlier.
It also recently announced plans to cut 130 positions at its Auckland head office.
Retail commentator Paul Keane of RCG said recently that the sale seemed odd to him, and questioned whether it was a short-term measure to lift its results.
But he also noted that The Warehouse had traditionally operated in low-value sites and paid cheap rents.
“Land values in Auckland are much higher these days, especially in the inner-city areas like Newmarket and the CBD.”
The Newmarket site stretches along 66-80 Broadway and 11-15 Railway St, occupied by The Warehouse, Warehouse Stationery, Noel Leeming, Torpedo7 plus a few smaller tenancies.
The sale is expected to settle in July and the transaction will generate a pre-tax gain of about $12 million.
Further details would be revealed in its full year result in September, the company said.