A sale in store? Photo: Penny Stephens
POTENTIAL buyers are lining up for the four David Jones department stores likely to be put on the market.
The stores are seen as an ideal opportunity to gain a foothold in the Melbourne and Sydney CBD retail markets.
The likely contenders include Westfield, CFS Retail, La Salle Management, Brookfield and Lend Lease's unlisted Australian Prime Property Fund, among others.
Property analysts said as a stand-alone trust, the four stores would not be considered diversified, but as a suite of assets they would be very attractive to an established retail landlord.
In its results presentation yesterday, David Jones' management said it was looking at a range of options for its four freehold properties.
These are valued in the 2012 David Jones accounts at $460 million, but the company commissioned an independent report from real estate agency Cushman and Wakefield that put the value at closer to $612 million.
David Jones would look to lease the sites, but given the parlous state of the retail sector could look to consolidate the four stores into one in each state.
At present the higher floors, which sit almost empty, would yield lower rent but could suit new food outlets as high-end inner-city restaurants.
In Melbourne, David Jones owns 229 and 310 Bourke Street, and in Sydney the landmark Elizabeth and Market streets stores.
Westfield already has a strong relationship with DJs in Sydney, with its walkways to the adjoining Westfield Sydney site.
If allowed by competition authorities, Westfield could buy the sites, consolidate the stores with a leaseback to David Jones and use the excess space for other tenants.
David Jones chief executive Paul Zahra said he was looking at a range of development opportunities for the properties.
In a March report from Bank of America Merrill Lynch, the analysts said that, based on estimates, the DJs Melbourne stores should be valued at at least $6100 a square metre and the Sydney store at about $11,000 a square metre.