Property company Vicinity Centres has put its FY27 guidance under review after revealing David Jones owes it about $2.2 million in unpaid rent.
In an update to the ASX following the appointment of voluntary administrators and receivers and managers to the department store, Vicinity confirmed that David Jones operates four stores across its portfolio. These stores contribute about $34 million, or 2.4 per cent, of the portfolio’s gross rental income.
The landlord noted that its David Jones stores at Chadstone, Chatswood Chase and QueensPlaza rank among the retailer’s most productive. Contractual lease expiries across the four stores range from 2029 at Chadstone to 2041 at Chatswood Chase.
Vicinity noted the administration and receivership process remains at an early stage, and the outcome for individual stores and leases is not yet known. As a result, it cannot yet determine with certainty the nature, timing or size of any financial impact.
The impact on its FY27 earnings guidance is also uncertain and remains under review. Vicinity added it will update the market once it can reliably assess whether there is any material impact on its outlook.
The landlord added it will engage with the administrators and receivers and assess the position of each store as the process progresses. Vicinity also noted it maintains contingency plans for each of its David Jones locations, and routinely assesses alternative uses for major tenancy space as part of its asset planning.
Vicinity’s position contrasts with that of Scentre Group, which detailed its own exposure earlier this week. David Jones occupies about 200,000 square metres across 17 Westfield centres, accounting for about 1.8 per cent of Scentre’s gross rent. Scentre’s share of bank guarantees across those stores is about $30 million, equal to eight months of gross rent, and can be applied against any unpaid rent.
The guarantees were a condition of Scentre approving Anchorage’s acquisition of David Jones in 2023, and Scentre reported David Jones had paid all rent up to September 30.
Christopher Hill, David McGrath and Joanne Dunn of FTI Consulting were appointed receivers and managers of ACP Riley Street Midco Pty Ltd, the parent company of David Jones, today.
Jason Preston, Shaun Fraser, Jacinta Neilsen and Matthew Hutton of McGrathNicol were appointed voluntary administrators by the directors at the same time.
David Jones’ physical and online stores continue to trade under the control of the receivers while they review operations. A transaction process seeking offers for a recapitalisation or a sale as a going concern will start immediately, managed by McGrathNicol.
“Voluntary administration and receivership provides breathing space and an opportunity to restructure the business,” FTI Consulting’s Christopher Hill said, adding that the current trading environment, rising costs, an outdated retail footprint and supply chain challenges had led to this point.
The appointment follows reports that up to 26 of David Jones’ 38 operating stores were tipped to close. Vicinity reported a 6.5 per cent drop in department store sales across its portfolio in the first quarter of FY27, the fourth consecutive quarterly decline for the category.
David Jones posted a pre-tax loss of $95.5 million for FY25, up from $74.1 million the year before, alongside an 8.7 per cent slip in total sales to $2 billion.