WOOLWORTHS will look to spin off its Masters hardware chain in the same fashion as its planned $1.4 billion supermarket deal, once it has acquired more outlets.
Nanjing Night Net

The chief executive of Woolworths, Grant O’Brien, said yesterday that the group was a retailer first, so once it had an appropriately sized portfolio of the home improvement chain, it would look to float.

However, he said it was still only a fledgling business, so any demerger would be be in the next few years.

He added that the lucrative pub assets and some stores within existing shopping malls would not be sold off. ”The plans for Masters are ongoing but we will wait until we get more open. They are unique assets,” he said. ”We are happy with hotels to stay in the joint venture.”

He said the focus of the new trust was to allow Woolworths to get back to running its retail business.

”It takes time to deal with the properties and we believe we have the right vehicle,” he said.

Under the new deal, Woolworths has spun off 69 centres across Australia and New Zealand to the newly-formed Shopping Centres Australasia Property Group (SCA).

It is envisaged that once the deal has been completed, the trust will also source its own assets, although the majority will be from Woolworths.

The new assets are all recently built, with the average lease to Woolworths between 15 and 23 years. The one hindrance will be finding new sites to open supermarkets.

Some of the smaller Woolworths metro stores could also be folded into the trust over time.

The new trust will be run independently from Woolworths with property heavyweights Phil Redmond and James Hodgkinson on its board. The current head of Woolworths’ group property operations, Anthony Mellowes, will be the interim chief executive. Philip Clark, the former managing director of Minter Ellison, will be the chairman.

Analysts said they expected investor confidence to be strong.

Once listed, pending Woolworths’ shareholder approval at the annual meeting on November 22, the trust will be a competitor to Charter Hall Retail REIT and BWP Trust.

Woolworths shareholders will receive one stapled unit in SCA Property Group for every five Woolworths shares.

In addition to the in specie distribution, SCA Property Group is undertaking a public offer of 337.3 million units to raise between $425 million and $506 million, which will be used to partially fund the acquisition of the portfolio.

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