$500m-plus deal on cards for David Jones’ Sydney CBD site
In one of the most significant property deals since the coronavirus crisis struck David Jones parent company, Woolworths Holdings, has gone into exclusive talks with property firm Charter Hall about the sale of its Elizabeth Street site in the Sydney CBD.
The deal, likely to be finalised at more than $500m, comes as part of the retailer’s review of the capital structure of its Australasian entities amid tough trading conditions, which extended to conducting a full review of options for the blue chip David Jones property portfolio.
This included the David Jones Elizabeth Street and David Jones Bourke Street Mall, which now will likely be dealt with at a later date, as the sales process via investment bank UBS, first focused on the Sydney asset.
Once finalised, the transaction will help set a benchmark for city retail property as the sector seeks to recover from deep falls in traffic, with neighbouring Westfield Sydney also suffering.
For Charter Hall the purchase would be in keeping with its focus on long-term sale and leaseback properties and the company has already struck about $8.5bn of such deals over the last decade. Longer term, it also gives the company a Sydney CBD site that can accommodate a major redevelopment.
The property also drew stiff competition from Shaun Bonett’s Precision Group and fund manager Ashe Morgan, as well as interest from investor Victor Comino.
David Jones had weighed holding the two prized properties housing its flagship stores and has now given itself longer to work out how to handle the Melbourne asset where both its performance and ability to sell have been hampered.
Although David Jones has been hit by the retail slowdown its operations have been supported by owning the properties. David Jones earlier this year hired KordaMentha to advice on debt and real estate strategies.
Woolworths Holdings in July also sold the David Jones menswear store on Melbourne’s famed Bourke Street mall to funds manager Newmark Capital for $121m.
Scentre Group and Cbus Property also teamed to buy the David Jones Market Street building in Sydney‘s CBD for $360m in 2016 and are overhauling the complex.
