Across the country the Masters signs are down, the lights are out and the front doors have closed on the failed retailer’s barn-like sheds, but their new owner is busy negotiating the next chapter. Source: Sydney Morning Herald
Home Consortium, which surprised bigger property players by striking an $830 million deal with Woolworths to take over its big box portfolio, has lodged plans with councils to reposition former Masters stores and is finalising sensitive negotiations over leasehold properties.
Home Consortium chairman David Di Pilla said the group had a shortlist of sites it was getting ready to relaunch as homeware retail outlets.
“Essentially we are planning to commence the launch of sites from July. It will be a staggered process … to October-November this year,” he said.
“It’s logistically a pretty major exercise. It’s over half a million square metres of retail space that needs to be repurposed, let up [and have] planning and zoning approvals.”
The big difference between traditional homemaker centres – where individual stores line the outside of a central carpark – and the new-old Masters outlets, will be that they are built around an internal mall so customers will shop inside, under cover.
“We think it will be quite an appealing and inviting retail experience,” he said.
Woolworths’ decision to sell 40 Masters freehold properties and 21 development sites and hand control of 21 leaseholds to the Home Consortium was part of a complex three-way deal that saw the retail giant exit its Masters hardware joint venture with a $500 million fire sale of hardware stock and a separate transaction of the Home Timber & Hardware division to Metcash for $165 million.
The retailing giant took a $1 billion hit in the process.
Home Consortium still has to overcome major hurdles before its vision becomes reality, not least the uncertain outcome of a court-ordered arbitration between Woolworths and Lowes, its joint venture partner, over aspects of the winding-up process, particularly the property deal that requires Lowe’s approval.
The privately-held consortium, made up of several wealthy families, also faced resistance from a group of leaseholders who last year threatened legal action if the terms of their original agreements with Woolworths weren’t upheld.
Several other leaseholders contacted this week said they had met with Woolworths and Mr Di Pilla and were satisfied their leasing arrangements would be honoured.
Queensland-based developer Norm Rix, who owns a Masters-leased building in Upper Coomera, said the consortium had lodged plans to convert his shed into a homemaker centre but the process was likely to be delayed several months by planning approvals before it could be remodelled and new tenants moved in.
“Going into an unknown situation, there is some concern … having met with them I’m satisfied they’re doing the right thing,” Mr Rix said.
“Masters was not going well. It was like having a bluechip tenant, but a Claytons one,” he said. “They’ve [the consortium] taken over the existing lease and are honouring it to the letter.”
ASX listed SCA Property Group also owns a Masters-leased building in Mount Gambier, South Australia. It’s CEO Anthony Mellows said a Bunnings store would replace the Masters outlet and open in July or August.
“It was an appropriate outcome that we’re very happy with,” he said.
Another leaseholder, who declined to be named, said Home Consortium had “moved their commercial approach substantially” and become more conciliatory towards property owners.
Once the deal is finalised, Home Consortium – backed by the owners of Spotlight, Chemist Warehouse and Aurrum – will be the biggest large format centre landlord in the country with more than 700,000 square metres of lettable space.
It has already negotiated leasing precommitments with some of the country’s biggest retailers, including JB Hi-Fi, The Good Guys, Woolworths and Dan Murphy’s.