Big box update
Woolworths closer to selling Masters sites
Woolworths can proceed with the sale of Masters sites after Lowe's is forced to sell back its stake
Woolworths can proceed with the sale of Masters sites after Lowe's is forced to sell back its stake
 
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Proposal for Bunnings Edwardston store and accommodations for Bunnings NZ store
HNN Sources
US home improvement retailer, Lowe's has been court-ordered to sell its shares in Masters; Bunnings lodges plans for $45 million store in Edwardstown (SA); Woolworths successfully appealed a Supreme Court judgement over a Masters store that was never built; the Bunnings Devenport store in Tasmania should be open in 2018; and a Bunnings NZ store in Grey Lynn is trying to blend into the local neighbourhood.
Lowe's to sell stake in Masters: arbitration

Woolworths recently announced that US retailer Lowe's is required to sell its 33% stake in joint venture vehicle Hydrox Holdings, the corporate entity that owns Masters Home Improvement, following court-ordered arbitration between the two parties.

The value of Lowe's stake in the failed Masters business will be determined by a third-party independent expert, then Woolworths will be required to pay that amount to its former partner.

The sale of Lowe's shares to Woolworths will enable the Australian retailer to then sell the business to Home Consortium. The statement from Woolworths said:
As a consequence of [the] award, Woolworths will be able to conclude the proposed transaction with Home Consortium without the consent of Lowe's, once the final valuation and share transfer processes have taken place.

In August last year, Woolworths announced that Home Consortium - which includes families behind Chemist Warehouse and Spotlight - would buy 40 Masters freehold sites, 21 Masters freehold development sites and 21 Masters leasehold sites.

In addition, it said it would sell inventory for about $500 million and sell the Home Timber and Hardware Group business for $165 million to Metcash.

Combined, Woolworths said it would reap $1.5 billion in gross proceeds from the three deals, but only $500 million after costs and prior to shareholder payments.
Lead up to arbitration

Woolworths and Lowe's have been arguing over the value of the latter's 33% stake. Experts hired by Woolwoths have judged the stake to be worth nothing, while Lowe's has said it is worth $654 million.

Lowe's also accused Woolworths of acting in bad faith when it offloaded 82 sites to the Home Consortium as part of its exit from its Masters hardware business.

The legal wrangling had delayed the completion of the $750m agreement as Lowe's was unwilling to sell its 33% stake in the joint venture.

Woolworths said the latest development would allow the conclusion of the proposed sale to Home Consortium without the approval of Lowe's.
Bunnings submits plans for Edwardstown

The inner suburb of Edwardstown located 6km southwest of Adelaide (SA) could be the location of a new Bunnings store. Developer Commercial & General has lodged plans for a $45 million Bunnings Warehouse at 1028-1042 South Road, Edwardstown, the site of a former Bridgestone factory.

Bunnings also continues to negotiate with Mitcham Council over a $42 million store proposed on Goodwood Road, Panorama. The big box retailer has not confirmed whether the latest plans are instead of or as well as those for Panorama. The two sites are 2km from each other.

However Southern Business Connections co-chairman Phil Ransome believes the site would be better used as a start-up business hub like the former Mitsubishi factory at Tonsley. He told Adelaide Now:
Bunnings will attract people to the area, but how many Bunnings can you go to?

He said the area was already congested with the Castle Plaza shopping centre just to the north and Melrose Plaza on the other side of South Road.

Mitcham Council's Development Assessment Panel rejected the Panorama proposal in August 2016 because of concerns about landscaping, paving and a lack of trees. A court appeal by local resident Neil Baron is on hold while Bunnings works out revised plans with the council.

The 4.3ha Edwardstown site is in the Marion Council region but the development application will be handled by the State Government's Development Assessment Commission. It is still owned by Bridgestone and car parts maker Toyoda Gosei, which ended operations there in 2015.

Mitcham mayor Glenn Spear said he would be disappointed if Bunnings did not go ahead with redeveloping the Panorama TAFE site, which was looking "shocking" because of vandalism. He said:
Bunnings has bent over backwards to appease residents' concerns about the site. They've been very good corporate citizens.

The Bridgestone site is still listed as for sale, and the Marion and Mile End stores will not be closing.

Related:
Big box update: Assessment for Bunnings Panorama - HNN
Woolies' wins appeal over Masters in Bendigo

The Court of Appeal has ruled in favour of Woolworths in its $14 million legal battle with a landowner over its failure to build a Masters Home Improvement store in Strathdale, Bendigo (VIC).

Woolworths successfully appealed a Supreme Court judgement that it pay $10 million in damages and $4 million interest to North East Solution Pty Ltd (NES).

The trial judge had initially found that both Woolworths and Masters had breached the terms of an agreement for lease of a property on the McIvor Highway on which a Masters store was to be built in 2010. The judge found that Woolworths had not acted in good faith and reasonably and ordered that it pay NES damages of more than $10 million and interest of over $4 million.

The Court of Appeal has set aside those orders and made orders dismissing the claim by NES.

The agreement for lease provided for Woolworths and NES to negotiate reasonably and in good faith the amount that Woolworths would contribute towards the construction costs of the Masters store. The trial judge found that Woolworths had failed to comply with the obligation in a number of respects.

In allowing the appeal, the Court of Appeal concluded that there was not sufficient evidence to prove Woolworths failed to negotiate in good faith.

The store was to be built on the McIvor Highway in Strathdale in 2010 on land owned by NES.

Woolworths ditched the deal with the company to chase a lease on another site in Bendigo being pursued by Bunnings.

Related:
Landlord sues Masters over lease - HNN
2018 opening for Bunnings Devonport

The construction of a Bunnings Warehouse in Devonport (TAS) is continuing. The store is taking over the K&D Warehouse site at the Devonport Homemaker Centre.

The Bunnings development was originally proposed for a site at Stony Rise Road next to the Devonport Homemaker Centre. Towards the end of 2015, $2 million was spent on site preparation for the warehouse chain and a smaller development.

Bunnings general manager - property, Andrew Marks has not provided an update on the future of Stony Rise Road site. He told The Advocate the $19 million store is expected to open in 2018. He said:
Construction works are currently underway and progressing as planned at the new Bunnings Warehouse Devonport site.

Fairbrother Construction has been contracted to build the store.

Related:
Big box update: Bunnings moving into Devonport - HNN
Bunnings NZ makes changes to Grey Lynn store

A controversial new Bunnings store that a group of Auckland residents fought hard to stop, has recently opened. However, the big box retailer says it will operate in a way that aims to make it less intrusive in the neighbourhood.

Jacqui Coombes, Bunnings NZ chief executive, showed the New Zealand Weekend Herald how the chain's first inner-city warehouse would have smaller delivery trucks, an internal truck turntable to ensure delivery vehicles did not back out on to the street and lower noise levels broadcast into the surrounding areas.

After a long battle, the Arch Hill Residents Association won concessions in the Environment Court: nearby houses must be checked for structural damage from the building work, summer trading hours are limited, loudspeaker use will be controlled and traffic slowed.

Ms Coombes said the three-level store is a NZD42 million (AUD39.2 million) investment by the Wesfarmers, which expects 3500 customers a day. She showed how trucks arriving at the city store could not be any more than 7m long because they would not fit on the turntable.

The nursery on the northern side has only two speakers and broadcast volumes would be controlled, she said.
We're very conscious we're operating in a high-residential-use area so we cut down on traffic flow and noise. People will come here and we'll continue to work with the local community. We want to be part of the community.

Ms Coombes also said the new store would be the 54th New Zealand Bunnings and the 349th Bunnings store in Australasia.

David Batten, a Grey Lynn Residents Association board member, said:
The store is what it is. Our views haven't changed at all, to be honest. This came out of mediation. Bunnings has showed themselves to have attempted to be good neighbours.
HNN Sources


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