David Jones ‘in breach’ for failing to pay rent for Westfield stores, operator says
Westfield’s parent company says David Jones is in breach of its tenancy agreement after failing to pay rent last month as rumours swirl the embattled department store giant may be close to falling into administration.
The retailer has been in financial difficulties in recent times, undergoing a restructure, and failing to file accounts with the corporate regulator for the second year in a row.
David Jones hasn’t paid its October rent to Westfield operator Scentre, according to the landlord. iStock
On Wednesday, Scentre, the parent company of Westfield, where 17 of David Jones’ 38 stores are located, said the department store has not paid its rent since September and had rejected a “generous” offer from the landlord.
“They … therefore are in breach,” chief executive Elliott Rusanow said in a statement.
“We have made a generous offer to Anchorage Capital Partners that would have facilitated the continuation of David Jones trading and that offer has disappointingly been rejected by them.”
David Jones falling behind on its rent comes despite it paying significantly less than the standard going rate for Westfield floorspace.
Scentre said David Jones occupied about 200,000 square metres of space across its 17 stores in Westfields.
Its gross rent is $352 per square metre, compared to the average of $952.
Scentre said David Jones had provided enough in bank guarantees to cover nearly three quarters of rent.
“David Jones has provided $45 million in bank guarantees for its stores across the Westfield Australia [and] New Zealand portfolio, of which the group’s share is approximately $30 million, equivalent to 8 months gross rent,” the company said.
“These guarantees can be applied against any unpaid rent.”
Nearly half of David Jones’ stores are located within Westfield locations. AAP
The operating report added that David Jones only contributed to 1.8 per cent of what it earned from rent, and out of every $100 of net cash profit earned, only $3.60 comes from David Jones.
While speculation about the department store’s future has rife, the update from Scentre comes on the same day a report indicated David Jones’ situation may be even more precarious than first thought.
According to the Australian Financial Review, the company could fall into voluntary administration as soon as tomorrow, following a board meeting.
David Jones was seeking landlord approval to close up to half of its 38 stores early, and to seek rent relief at others, the AFR said.
David Jones has been contacted for comment.
Share a tip-off, video or photo with us
Most viewed in Business
The future of David Jones Westfield locations in doubt after missed deadline
David Jones ‘in breach’ for failing to pay rent for Westfield stores, operator says
Big tech loses $3.7 trillion in one month as investors grow cynical over AI spending
Owner of Rip Curl, Kathmandu in talks to sell to US giant
