In a battle that pitted retail billionaires and Rich Listers against one another, IPO-bound Home Consortium has emerged victorious in a bitter multimillion-dollar leasing dispute with homemaker centre rival Aventus.
The decision, handed down in the Victorian Supreme Court last week, ordered the Aventus Retail Property Fund, backed by retail whiz Brett Blundy, to consent to Home Consortium sub-leasing a former Masters Home Improvement warehouse within the Aventus-owned Cranbourne Home homemaker centre in Melbourne’s south- east to Amart Furniture.
Home Consortium, backed by Spotlight founders Zac Fried and Morry Fraid and Chemist Warehouse owners Mario Verrocchi and Jack Gance and led by former UBS investment banker David Di Pilla, took its landlord to court in March after waiting almost three months for Aventus to make a decision on its sub-lease request. The delay risked a 6000-square-metre leasing deal worth about $1.5 million in annual rent.
The two homemaker centre rivals became occupiers of separate buildings on the same site after Home Consortium acquired the head lease to the former Cranbourne Masters store when it acquired the defunct Masters portfolio of sites for $725 million in October 2016 from Woolworths.
Commenting on the Supreme Court decision, Mr Di Pilla called it a “very pleasing outcome for Home Consortium”.
“We are very keen to move forward in a positive and constructive way with Aventus,” he told The Australian Financial Review.
Aventus, which will release its full-year results on August 21, acknowledged the Supreme Court ruling requiring it to “consent to a proposed sub-lease to Amart of part of the premises at Cranbourne previously occupied by Masters” and said it was “considering the judgment”.
In his published judgment, Justice Clyde Croft noted a valuation report by commercial agents Savills that Aventus would not allow “any lease assignment” or conversion of the premises by its “competitor” Home Co given the lease income is “guaranteed by Woolworths Limited which mitigates any income risk”.
Under cross-examination Aventus CEO Darren Holland confirmed the A-REIT’s preference was to “get control of the site at Cranbourne” rather than “Masters creating a centre within a centre that’s going to compete with our existing centre”.
He also confirmed that Aventus had approached Amart as its tenant within a proposed new development at Cranbourne Home.
The two homemaker centre giants and Harvey Norman are the three biggest players in the large format sector, which generates about $70 billion a year in annual sales, with major tenants including Bunnings, Harvey Norman, The Good Guys and JB Hi-Fi.
Home Consortium’s $1 billion float, targeted for the second half of the year, will create a listed trust with 30 homemaker centres and 369,000 square metres of retail space compared with Aventus, whose portfolio comprises 20 homemaker centres and 535,000 square metres of lettable space.
Keep up with Commercial Real Estate news.