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WOOLWORTHS NOW IN DEVELOPMENT BUSINESS.WHY NOT?THEY ARE IN THE FARM BUSINESS…

Woolworths joins forces

with developer

Eli Greenblat
December 7, 2010

WOOLWORTHS has taken the unusual step of forming a joint venture with a property developer to build a shopping centre and specialist shops in Western Australia, as it moves to safeguard its expansion plans in the face of the banks’ tighter lending for property deals.

Woolworths will take an 80 per cent stake in the planned shopping centre in Geraldton, after forming a joint venture with local businessman Barry Humfrey and his company, Humfrey Land Developments & Real Estate.

The partners will build a shopping centre that will include a 3200-square-metre supermarket and 1800 square metres of speciality shops and community facilities.

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Mr Humfrey has been involved in the development of a range of commercial properties in Geraldton and Exmouth, including tourist resorts.

Woolworths and Mr Humfrey have created a company called Fabsky to build the shopping centre, BusinessDay has learnt, with Woolworths finance director Tom Pockett and company secretary and general counsel Peter Horton named in ASIC documents as directors. Mr Humfrey is named as the third director.

Woolworths’ stake in the partnership is held through Fabcot, the retailer’s development arm. The joint venture was formalised last month.

Woolworths has used several methods to protect and accelerate its new-store developments, buying up parcels of land in its own right on which to develop supermarkets or forming deals with property developers.

The joint-venture model, as forged with Mr Humfrey, is more unusual.

Woolworths has also used its massive cash flows to save distressed property developments from bank foreclosure, although there is no suggestion the site in Geraldton was facing financial problems.

Following the global financial crisis, it was feared that skittish banks and other lenders would refuse to lend large sums of money to property developers or would demand much greater equity from developers before credit was provided.

This could have capped the expansion plans of Woolworths, as well as those of rivals such as Coles.

Many development deals have fallen over since the financial crisis, with developers reporting much stricter lending conditions from the banks.

Woolworths has been engaged in an aggressive supermarket development program, as well as a plan to build more than 150 big-box hardware stores over the next five years.

Sourced & published by Henry Sapiecha

December 7th, 2010
Topic: BUILDINGS, DEVELOPMENTS PROJECTS, NATIONAL BRANDS, PEOPLE, REAL ESTATE, STORES SHOPS Tags: , , , , ,

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