Scentre leads charge for iconic David Jones store

The group, mooted as the favourite against a joint venture between the listed Stockland and superannuation fund-backed Cbus Property, is weighing up a broader deal with David Jones owner, South Africa’s Woolworths Holdings.

The battle for the property, being handled by real estate firms CBRE and Savills, has been hard-fought. Scentre has been keen to grow the footprint of its Westfield Sydney flagship, and may also secure a deep relationship with David Jones.

While Scentre, a legendarily tough landlord that operates under the Westfield brand, boasts a strong hand given its more extensive ties with Woolworths Holdings, Stockland and Cbus Property are not yet out of the race.

Scentre’s edge derives from owning more centres that house David Jones stores and those of Country Road Group, a separate Woolworths Holdings subsidiary, and the ability to offer rental deals and the prospect of putting these shops into the $1.6 billion of malls it is redeveloping or building across Australia.

Stockland’s play for the David Jones store would see it overhaul its existing holdings into an iconic development that would also dramatically lift the value of the shopping centre in the Piccadilly Complex

Scentre can also promise prime positions in the $3 billion of developments it has on the drawing board, as well as bringing its influence to bear on the space requirements of Country Road’s private label brands, Trenery, Witchery and Mimco. But Woolworths Holdings deals with almost all of Australia’s major shopping landlords.

Stockland has struck deals with the South African retailer, with David Jones part of $377 million redevelopment of the Green Hills shopping centre in NSW after Myer pulled out.

Stockland’s play for the David Jones store would see it overhaul its existing holdings into an iconic development that would also dramatically lift the value of the shopping centre in the Piccadilly Complex.

In Stockland’s 50/50 joint venture with Cbus, the partners are focused on distinct areas. Stockland is seeking to create a prime Sydney CBD retail holding at a time when values are soaring. Cbus Property is focused on finding an apartment project in the area.

CLSA analyst Sholto Maconochie has suggested that Scentre, which he says has the highest quality retail portfolio in Australia, should capitalise on its strong pricing and undertake an equity raising if it acquires the DJs store.

Maconochie says that with gearing at 32.3%, a large development pipeline to fund and an elevated payout ratio, a capital raise in the order of $777 million to $1.5 billion could be undertaken.

Stockland is seeking to create a prime Sydney CBD retail holding at a time when values are soaring

Scentre might also sell its $1 billion Sydney office tower, he says, but property executives have suggested this is not under consideration.

The parties declined to comment on the latest twist in the race for the property.

Whatever the fate of the key Sydney holding, Scentre and partner QIC Global Real Estate are advancing their plans for a $1 billion mall at Coomera Town Centre – a long mooted Queensland project.

The pair have just outlaid almost $20 million for a key 9.821ha land parcel near the Coomera train station, which forms the core of the planned town centre precinct.

Scentre and QIC bought the land at 103-121 Foxwell Rd from the Queensland government, which had earlier set aside the parcel for a failed World Expo bid. QIC and Scentre have now poured $81.595 million into buying land in the area, building their holdings up to 92.2ha.

The pair have bought from groups including the listed Ardent Leisure and Japanese company Hokojitsugyo.

This article originally appeared on www.theaustralian.com.au/property.