A 188-year-old anchor tenant just exposed the soft spot in mall valuations

David Jones survived two world wars, the rise of Kmart and the arrival of online shopping. It did not survive a rent negotiation. The 188-year-old department store chain was placed into voluntary administration this week, with McGrathNicol appointed administrator and FTI Consulting appointed receiver after talks with its landlords broke down.

The obvious reading is another retail failure. The more useful one, for anyone who owns, lends against or leases near commercial property, is that landlords have stopped treating anchor tenants as untouchable. They looked at the numbers, decided the tenant was worth more gone than discounted, and walked.

Every major landlord said no

David Jones had paid rent in full to 30 September but nothing since, putting it in breach. Westfield operator Scentre Group, which hosts 17 of the remaining 38 stores including the single New Zealand outlet at Westfield Newmarket, was blunt. Chief executive Elliott Rusanow said Scentre had “made a generous offer to Anchorage Capital Partners that would have facilitated the continuation of David Jones trading and that offer has disappointingly been rejected”.

The detail that matters is what happened next. David Jones wanted to shrink to a premium chain of around 12 key stores, and that plan was rejected by at least two other major property groups besides Scentre. This was not one hard-nosed landlord. It was a market consensus that even a slimmed-down David Jones could not make the rent stack up.

The market priced this in years ago

Nobody should be surprised. South Africa’s Woolworths paid A$2.1 billion for the group in 2014 and sold it to Sydney private equity firm Anchorage for less than A$100 million in 2023. That is a wipeout of roughly 95% in nine years.

The accounts confirm the slide. David Jones posted a $95.5 million loss in FY2024/25, up from $74 million the year before, and auditors PwC flagged material uncertainty over its ability to continue as a going concern. It then missed the end-of-October deadline to file its 2025/26 accounts. By the time British distressed lender Hilo Global appointed receivers, the formal default was a formality.

Scentre’s reassurance only answers half the question

Scentre has moved quickly to calm investors. David Jones accounts for only about 1.8% of group gross rent and 3.6% of funds from operations, and Scentre holds roughly $30 million in bank guarantees, equal to eight months’ gross rent, which it demanded as a condition of approving Anchorage’s takeover. For a diversified giant, the rent line is a rounding error. David Jones paid A$45 million in rent across the nine months to September, spread over a vast portfolio.

But anchors were never valued for their own rent. Department stores historically paid modest rates because they pulled foot traffic past higher-paying specialty tenants. Lose the anchor and the real exposure sits with the neighbours, the footfall and the capitalisation rate on the whole precinct.

The sharpest evidence comes from Singapore. Starhill Global REIT owns the David Jones Building in Perth, where the retailer occupies 95.1% of lettable area. It disclosed S$1.3 million in arrears and warned that if the lease ended with no replacement for 12 months, distribution per unit would fall about 10.6% and portfolio occupancy would drop from 97.4% to 86.1%. One tenant, one building, a double-digit hit to payouts.

Newmarket becomes the local test case

For New Zealand, the question is Westfield Newmarket. FTI’s David McGrath and Joseph Hansell are handling the New Zealand arm, but no decision on the Auckland store has been announced. Store closures are expected before Christmas, the worst possible point in the retail calendar. The group employs around 6,730 staff across Australia and New Zealand, though local numbers have not been disclosed.

Customers are exposed too. Erin Turner, CEO of the Consumer Policy Research Centre, warned gift card holders are unsecured creditors who may recover “cents on the dollar or even nothing at all”. Any retailer carrying large gift card liabilities should note how quickly that becomes a trust problem.

Shrinking, not disappearing

In April 2026, Macquarie University retail historian Dr Matthew Bailey argued department stores’ “challenges go back a long time” and predicted they would keep losing stores and floor space rather than vanish outright. That is the trajectory landlords are now pricing.

McGrathNicol’s sale or recapitalisation process will decide whether a smaller David Jones emerges. Either way, the landlords have made their choice: take back the box rather than subsidise a fading brand. The test is whether they can fill it with something that pulls a crowd. If they cannot, the cost of saying no will show up not in this year’s rent roll but in next year’s valuations.

Sources

• NZ Herald: David Jones enters voluntary administration after talks with landlords collapse (2026-11-04)
• The Guardian: David Jones expected to fall into administration after failed 11th hour talks with biggest landlord (2026-11-04)
• 1News: Behind on rent, David Jones teeters on edge of collapse (2026-11-05)
• ASIC: David Jones Limited – Financial Statements and Directors’ Report (2026-10-31)
• BusinessDesk: David Jones enters voluntary administration as lender appoints receivers (2026-11-05)
• Business Times: Starhill Global REIT says DPU could take major hit from David Jones voluntary administration (2026-11-05)
• Stuff: David Jones collapses, store closures expected before Christmas (2026-11-05)
• Revelio Labs: Workplace Data – David Jones Employment (2026-11-05)
• RNZ: David Jones has been placed into receivership. Here’s what shoppers should know (2026-11-05)