Charter Hall assesses David Jones flagship exposure after retailer collapse
Charter Hall is reviewing the future of its interest in David Jones’ Sydney flagship after the 188-year-old department store retailer collapsed into voluntary administration.
Charter Hall Long WALE REIT (CLW), which owns 50 per cent of the Elizabeth Street store, today told investors it had been notified of the appointment of McGrathNicol as voluntary administrators and FTI Consulting as receivers and managers.
The property contributes about 4 per cent of CLW’s net property income.
The listed trust said it was assessing the implications of the appointments and would engage with both insolvency firms.
It holds a bank guarantee equivalent to about 12 months’ rent under the lease.
CLW acquired its 50 per cent interest for $255m, with the remaining ownership split between the Charter Hall DVP partnership, which holds 25pc, and Charter Hall Group, which holds the other quarter.
The DVP partnership’s investors were reported to include Telstra Super and Victorian Funds Management Corporation.
Private equity firm Anchorage Capital Partners acquired David Jones in 2023 for a reported price of less than $100m.
3530 square metre site opposite Hyde Park
Charter Hall is also assessing plans for the property and will provide further updates to the market.
The administration follows the collapse of negotiations between David Jones owner Anchorage Capital Partners and major landlords, including Scentre Group, which operates Westfield shopping centres (continues below).
Scentre, which has 17 David Jones tenancies across its portfolio, had offered support intended to keep the retailer trading through the Christmas period.
The proposal was rejected by Anchorage.
The retail giant had fallen behind on rental payments, with the landlord confirming it had received rent only through September 30.
David Jones’ stores and online business are continuing under the control of the receivers while they review operations and pursue a potential sale or recapitalisation.
20-year leaseback deal
Charter Hall-led funds and partnerships bought the 12-level Elizabeth Street property from David Jones, when it was owned by South African retailer Woolworths, in December 2020, for $510 million.
The transaction was structured as a sale-and-leaseback, with the retailer committing to a 20-year triple-net lease.
The initial annual net rent was $25.5m with minimum annual increases of 2.5 per cent and additional turnover rent linked to sales.
The 3530 square metre site at 86-108 Castlereagh Street has frontages to Elizabeth, Castlereagh and Market streets and overlooks Hyde Park.
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