Myer wins legal battle over Chadstone lease
Billionaire John Gandel and the listed Vicinity Centres have lost a legal battle with department store Myer over rental payments at Melbourne shopping landmark Chadstone.
Myer was hit with legal action in late 2016, when the landlords alleged there was “a mutual mistake in the drafting of the variable outgoings and provisions in the lease for the Myer Chadstone store or that those provisions have been misinterpreted”.
At the time two decades ago, the Gandel operation was dealing with Myer as it planned the 20th stage of the giant shopping complex, when a mistake was made in the drafting of the agreement.
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The pair wanted the lease to be fixed up and payment of alleged unpaid outgoings from 2000 to 2016 totalling $19.14 million, plus GST, as well as interest and costs.
However, the Supreme Court of Victoria yesterday ruled in favour of Myer and dismissed claims made by the landlords.
This may not end the dispute. A Vicinity Centres spokeswoman says the company is “disappointed” with the court’s ruling and “considering its options in relation to the court’s decision”.
The pair wanted the lease to be fixed up and payment of alleged unpaid outgoings from 2000 to 2016 totalling $19.14 million
Like many shopping centre owners Vicinity had been under pressure as consumers switch to online buying but Chadstone’s value was upgraded in property valuations that added $408m to its portfolio earlier this month.
Vicinity chief Grant Kelley says the group has a net $324.1 million or 12.1% uplift in its investment in Chadstone. “Chadstone was independently valued in the period and is now valued at $6 billion, with the capitalisation rate firming from 4.25% to 3.75%,” he says, adding that it is trading strongly following completion of a $666 million redevelopment.
Shaw and Partners say that the company’s headline revaluation gains look impressive, but it is worth noting that 80% of net gains were driven by Chadstone. “Of greater relevance is that the bulk of Vicinity’s portfolio reported a slight net revaluation decline over June 2017 levels,” the broker says.
The dispute has not held back the centre, which opened the first stage of its 40th upgrade in 2016 and last month revealed it would host a $130 million MGallery by Sofitel hotel.
This article originally appeared on www.theaustralian.com.au/property.
