Mixed mes­sages

Townsville Bulletin - - NEWS - TERRY McCRANN

ONE of the wis­est pieces of ad­vice – nar­rowly about in­vest­ment, more broadly about ne­go­ti­at­ing your jour­ney through life – was given about the late Kerry Packer, father of course of peri­patetic James.

Sim­ply, if Kerry was sell­ing, don’t be the buyer; and some­what less pun­gently also the re­verse.

With that in mind, what to make of the sale by one of Aus­tralia’s great prop­erty own­ing fam­i­lies of its last big stake in “bricks- and- mor­tar” re­tail own­er­ship? A ques­tion, which is given added po­tency be­cause another mem­ber of the ex­tended fam­ily is go­ing in ex­actly the op­po­site di­rec­tion?

Mel­bourne’s Be­sen fam­ily has quit its 25 per cent stake in the big­gest shop­ping cen­tre west of the CBD at the same time the Gan­del fam­ily is mak­ing Chad­stone – which is not only the big­gest cen­tre east of the CBD, but in­deed the big­gest in Aus­tralia ( and, as it used to be said in the day, the big­gest in the south­ern hemi­sphere) – even big­ger.

The pa­tri­arch of the Be­sen fam­ily is Marc. His wife Eva is the sis­ter of John, the pa­tri­arch of the Gan­del fam­ily – so one half is get­ting out of re­tail prop­erty as the other goes in con­sid­er­ably deeper.

In­deed, even more specif­i­cally, John and Marc jointly built the Sus­san fash­ion re­tail chain, which af­ter start­ing wholly in the Gan­del fam­ily ended ( up) sub­se­quently ( and re­mains) wholly in the Be­sen fam­ily, when Gan­del sold out to his broth­erin- law in 1983 to put ( al­most) all his eggs in the Chad­stone bas­ket.

He bought ( the quite un­recog­nis­able to a mod­ern shop­per, very, very tired) Chad­stone from the old Myer Em­po­rium when Myer was at very low ebb in 1983. Fast for­ward 34 years, and as they say, the more things change …

The events swirling around Myer back in 1983 not only set Gan­del to­tally on the prop­erty path, it also brought then Mel­bourne rag­trader Solomon Lew onto the Myer regis­ter – and then on to ef­fec­tive con­trol of Coles Myer when the two great re­tail­ers merged in the mid- 1980s.

There’s a lot of his­tory, a lot of Mel­bourne in all that; and about cor- po­rate Aus­tralia more broadly. But the Gan­del and Be­sen sto­ries also fit into the broader ex­plo­sive dy­namic of re­tail prop­erty own­er­ship, one of the big driv­ers of bil­lion­aire cre­ation in Aus­tralia over the last few decades, cour­tesy of our pop­u­la­tion Ponzi.

What they were do­ing in Mel­bourne, the Lowy fam­ily un­der its pa­tri­arch Frank was do­ing – on a much grander and more glob­ally am­bi­tious scale – in and out of Syd­ney. With fel­low- Syd­neysider Gerry Har­vey mar­ry­ing re­tail and prop­erty in a some­what dif­fer­ent fash­ion in Har­vey Nor­man.

So much for his­tory: both the Be­sen sale and the Gan­del ex­pan­sion come at a sem­i­nal pivot – in­deed, piv­ots, plu­ral – point( s) for re­tail and prop­erty own­er­ship in Aus­tralia.

Nar­rowly, the Be­sen sale is a con­ven­tional trans­ac­tion. It’s a mi­nor­ity stake and glob­ally record low in­ter­est rates and a global hunger for yield in­vest­ments give it a very at­trac­tive cap­i­tal­i­sa­tion value.

The GPT group is not just the ob­vi­ous buyer but the ra­tio­nal buyer: it’s pot- com­mit­ted to own­er­ship of re­gional shop­ping cen­tres. Go­ing from 75 to 100 per cent is a no- brainer.

Even so, bricks- and- mor­tar re­tail is at a very in­ter­est­ing point( s). There are a lot of empty high street shops even in high res­i­den­tial growth ar­eas of high pop­u­la­tion growth Mel­bourne and Syd­ney.

Cen­tres re­tain high re­tail te­nan­cies, but they have al­ways and re­main crit­i­cally an­chored by David Jones and Myer in non- food re­tail and of course Wool­worths and Coles in food.

DJs and Myer are not liv­ing sym­bols of great prof­itabil­ity and high­growth fu­tures; Woolies and Coles are still ( broadly) record­ing growth but at a big cost in mar­gin.

The prob­lems of the first group can be sourced in a com­bi­na­tion of over­in­vest­ment in bricks- and- mor­tar re­tail ( in­clud­ing the ar­rival of the Zaras and Uniq­los) and the ex­plo­sion of the – global – on­line al­ter­na­tive. Plus the cat­e­gory killers like JB.

While the food duo have been as­sailed by their own price war since the 2008 Wes­farm­ers takeover of Coles and the re­lent­less growth of Aldi to a size that now mat­ters. So far, the dig­i­tal space has not been a big driver.

But, we ain’t seen any­thing yet. The – ram­pag­ing – ele­phant in the US re­tail room is head­ing our way. Ama­zon of course. It’s not go­ing to be “shop­ping- cen­tre friendly”.

In the US, Ama­zon – and a range of other fac­tors: eco­nomic, busi­ness and so­ci­etal – have seen hun­dreds of shop­ping cen­tres, malls, shut­tered. And that’s just as the dig­i­tal dy­namic re­ally starts to pick up steam. We will now see how this plays out down un­der. The ex­tended Be­sen- Gan­del fam­ily gets a par­tic­u­larly in­ter­est­ing mix of ring­side seats.

Eva and Marc Be­sen

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