Malaysian group buys Newspaper House for $35m

Wednesday, 15. August 2018

Newspaper House, the heritage Collins Street building with a glittering mural mosaic on its facade, has sold for $35 million just two years after it was acquired by listed Singapore developer/builder Lian Beng for $22.7 million.
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In a relatively risky move, Lian Beng snapped up Media House midway through 2015 when the building was vacant.

It was Lian Beng’s first foray into the Melbourne market.

The group has now on-sold the almost fully leased building to a Malaysian-listed conglomerate, Oriental Holdings, controlled by billionaire Loh Kian Chong.

Other interests associated with Mr Kian Chong control the Jasper Hotel in Elizabeth Street, the Strandbags building in Bourke Street Mall and a large ground-floor shop at the base of Camberwell’s Aerial Apartments.

Until recently, they also controlled a two-story building at 469 Elizabeth Street.

Oriental’s new purchase, the seven-storey, art deco, sandstone building at 247 Collins Street, is now almost fully leased and will provide it with a 7??-year weighted average lease expiry profile.

The building’s new tenants include healthcare group Bupa and education provider Discover English.

Sources close to the deal suggest it sold on 4.2 per cent yield on a fully leased basis.

Deals involving Collins Street buildings have been relatively rare.

GPT Group’s unlisted office fund late last year finalised its $275 million acquisition of the ANZ Bank’s former headquarters on the corner of Collins and Queen streets.

In that complex deal, the ANZ retained control over the most prominent of the heritage buildings, the so-called Gothic Bank building, while GPT’s Wholesale Office Fund acquired the commercial core, a 39,000-square-metre office tower behind the historic buildings.

The campaign to sell Newspaper House was managed by CBRE’s Josh Rutman, Kiran Pillai and Mark Wizel in conjunction with Knight Frank’s Paul Henley, Andrew Hansen and George Burbury.

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Yields driving lower as SMSFs hunt for returns

Wednesday, 15. August 2018

Self-managed super funds are driving yields lower in a bid to bolster returns with commercial property investments.
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Yields for childcare centres and suburban offices and shops are falling – as low as 3 per cent in in the latter case – as self-managed super schemes chase better returns than bank deposits can provide.

Recent data from the Australian Taxation Office reveals that SMSFs now hold more property in their funds than cash. The latest ATO figures, analysed by Credit Suisse, show that by the end of December 2016, SMSFs held $162 billion in property – about half of which was commercial – while cash comprised only $157 billion. Indirect holdings in property are believed to be even higher.

The moves come amid warnings about the dangers of borrowing to buy property for a super. The volume of money borrowed by self-managed funds has increased to $24 billion from $2.5 billion since 2012, 91 per cent of which has been used to purchase residential and commercial property.

Auctioneer David O’Callaghan said there were signs SMSF investors were looking at the difference between deposit rates and yields and thinking a commercial property investment is a better deal.

“They think because they’re getting 2.5 per in the bank but 3.5 per cent from property that it’s like for like,” Mr O’Callaghan said.

“But the acquisition costs of property and the costs of ownership do not mean it’s only a 1 per cent differential,” he said. “Particularly at the low end of the market under $2.5 million.”

Industrial yields at the low end of the market are plummeting. In Melbourne’s south-eastern suburbs, an SMSF investor paid $2,055,000 for two new office-warehouses in Huntingdale on a yield of 5.74 per cent underpinned by three-year leases.

And childcare centre yields have dropped nearly 200 basis points in the past 18 months. A 90-place childcare centre at 1 Regent Street, in Geelong, was sold for $3.1 million on a yield of 6.6 per cent after only 22 days on the market. The centre has a 10-year lease and returns $204,000 a year in rent.

AMP Capital’s head of SMSF and self-directed wealth Tim Keegan said the latest Black Sky Report showed that self-managed schemes are anticipating 10.9 per cent growth this year and expect commercial property property investment to underpin it.

“SMSFs are seeking greater value from their investments. Commercial property is a great way to access this value with less downside risk, as income yields in commercial real estate are generally supported by longer lease terms of up to 10 years and higher,” Mr Keegan said.

Super funds already accounted for 60 per cent of total flows into the AMP Capital Wholesale Australian Property Fund – up from 28 per cent two years ago, he said.

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Would you pay to watch free-to-air TV?

Wednesday, 15. August 2018

Satellite farm on the rooftop of SBS TV. Generic Television, satellites, free to air. Monday 31st May 2010 AFR photo Louie Douvis job# 129997 Photo: Louie DouvisAnalysis
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Television broadcast licence fees are top of mind in the media industry this week as the federal budget approaches and Network Ten readies for what are expected to be stormy half-year results.

But would cuts in licence fees be enough to save the industry?

Last budget the government announced a permanent 25 per cent discount in licence fees to 3.375 per cent of gross revenue, down from 4.5 per cent of gross revenue.

This means the government will receive about $108 million in fees, down from $154 million the year before.

Effectively, the discount reduces Network Ten’s fees to about $23 million, down from about $30 million on their 2015-16 revenues of $676 million. Nine’s fees drop from about $58 million to $43 million, and Seven’s from $77 million to about $58 million.

But the networks want more cuts, arguing licence fees are lower overseas and they repay the public through licence obligations and economic stimulation. For example, UK broadcasters only pay 0.18 per cent of revenue in fees, Seven told a parliamentary committee. (For companies with revenue the size of Ten, Seven, and Nine the fees would be about 0.27 per cent).

More recently they have asked for fee cuts to compensate for a proposed ban on gambling ads screening during live sport. However, one analyst estimates this law cost a network like Nine, which screens rugby and cricket, less than $10 million in lost revenue.

So if fees were slashed to UK levels of less than one per cent, Network Ten’s licence fee would drop to about $1.2 million, Nine’s to $2.3 million and Seven’s to $3.1 million.

Given that Ten has warned it could see losses of up to $30 million this year, the saving of $21.8 million would help, but it wouldn’t reverse fortunes.

Still, in the declining world of traditional media every little bit helps and every cost reduction saves jobs.

But on the other hand, should television get a free ride on spectrum? The broadcast licence fee is how television networks pay for making money out of publicly-owned spectrum, as well as through their corporate taxes.

Acting chief executive of Free TV Australia, Pamela Longstaff, says television does not get spectrum for free.

“Fees need to recognise that there are stringent obligations on how [networks] use spectrum, including spending $1.5 billion per annum on local content,” she says.

Networks provide free live sports, news, current affairs and fulfil important public policy obligations, she added.

But Australia’s spectrum is worth billions to the public purse, just ask the telecommunications industry.

TPG recently paid an international record high price of $1.2 billion for a 12-year licence on a modest chunk of spectrum in the 700 megahertz (MHz) frequency to so its new mobile network can reach just 80 per cent of the population.

Telco spectrum licences are usually issued for 15 years at a time. In 2012 former communications minister Stephen Conroy decided to reissue Telstra, Optus and Vodafone’s licences in the 2000 MHz range for a collective $1.4 billion, or about $90 million per year.

The television networks are sitting on billions of dollars worth of spectrum, but only pay an annual transmission fee of less than $100 a year plus licence fees.

It is unlikely the federal government would drop the fee to the same level as the UK, where the communications regulator collected just ??18 million ($30.5 million) in television broadcasting licence and administration fees in 2015-16, and ??1.1 million ($1.8 million) for the cost of managing television broadcasting spectrum.

And bear in mind the UK also charges every household with a television set an annual fee of ??147 ($A250). This levy reaped ??3.7 billion ($6.3 billion) last year, which went straight towards ??4 billion ($6.8 billion) in BBC operating costs. (Locally the ABC receives $1 billion in government funding to cover its $1.2 billion operating costs).

The commercial networks haven’t publicly suggested how the government should make up for the revenue shortfall if and when licence fees are cut.

But annual levies or subscription fees would not go down well in the electorate and in the digital era would push more people away from free-to-air broadcasting and into streaming services, which pay no licence fees and often no tax in Australia.

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Girt by derision: a short and tortured history of our national anthem

Wednesday, 15. August 2018

Poor Girt. The most cutting – and possibly most accurate – comment that’s been made about the old thing is that Australia is in danger of falling off to sleep while singing the words, which barely anyone knows anyway.
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That was the judgment of a former National Party senator from Queensland, Sandy Macdonald, who found himself bored and embarrassed as he listened to a military band struggling to give life to old Girt on the shores of Gallipoli on Anzac Day, 2001.

It was time Australia got itself a new national anthem, MacDonald told Parliament when he returned, to little avail.

Since Coalition MP Andrew Laming suggested the national anthem get new lyrics that reflect our values and “jocular sense of humour”, the internet has been atwitter??? about how we could improve the old Girt.

The journalist and humorist Mungo MacCallum advanced a theory about why Advance Australia Fair has always been such a clunker: there were “so few rhymes with Australia; the only obvious one is failure”. He then went on to offer alternatives: azalea, dahlia, espahlia, all hail ya, regalia, inter alia and derail ya.

Criticism and snorting derision of Australia’s national anthem have been something of a perennial ever since the Whitlam Government felt Australia ought to have an anthem to be used instead of God Save the Queen.

There’d already been a competition to find one, run by the Australian Council for the Arts, which decided that none of the entries was worthy. The fiasco ended with three songs variously championed: Advance Australia Fair, Waltzing Matilda and Song of Australia.

If Advance Australia Fair would end up being nicknamed Girt because of its curious use of “girt by sea” to point out that Australia was an island, it seemed positively extravagant that Song of Australia – an old favourite of South Australians – included the deathless line “from mountain-top to girdling sea”. No nation, surely, has been blessed with so much musical girting and girdling.

Not to mention jolly swagmen and stolen jumbucks.

With no one prepared to make a decision, a poll was held, naturally. The Australian Bureau of Statistics polled 60,000 Australians and Girt won.

The Whitlam government was soon after dismissed, and Malcolm Fraser’s Coalition government reinstated God Save the Queen as the national anthem for occasions when the Queen didn’t require special honour.

But Fraser also felt there ought to be a national song for occasions when the Queen didn’t require special honour. Naturally, his government held a plebiscite.

Advance Australia Fair got the nod from 43.29 per cent of respondents. Another 28.28 per cent favoured the jolly swagman, 18.78 per cent wanted to stick with the Queen, and just 9.65 per cent liked the idea of girdling along to Song of Australia.

This left the nation in the peculiar situation of having God Save the Queen as its national anthem and Advance Australia Fair as its national song.

And there were the words, written in 1878 on a bus on the way home from an evening of national anthems at Melbourne’s Exhibition Building. The composer, upset there wasn’t an Australian note, was a Scottish-born fellow named Peter Dodds McCormick, who hid behind the pen-name “Amicus” (Latin for friend).

Old Amicus, a man of his time, wrote about “gallant Cook” borne on by “British courage” to land on Australia’s shore, where “with all our faults we love her still, Britannia rules the waves”, among other sentiments.

The government of Bob Hawke finally decided to stop the shilly shallying and adopted Advance Australia Fair as the official national anthem in 1984.

By then gallant Cook and Britannia had long disappeared, and modified lyrics had been inserted for cultural and inclusive reasons. The very first line, originally “Australia’s sons let us rejoice” became “Australians all let us rejoice”.

But all these years later, with the original four verses cut to just two, few enough Australians know the second verse, the left derides its sentiment about “boundless plains to share” as hypocritical, considering the nation’s treatment of asylum seekers’; the right worries that “boundless plains to share” is an invitation too broad; and those with an ear for music know Girt’s a dud.

After the polls, the plebiscite and decades of argument, largely by politicians – most of whom, in love with their own voices, are tone deaf – you wouldn’t bet on a change.

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US Republican senator John McCain to visit Canberra and Sydney

Wednesday, 15. August 2018

Malcolm Turnbull and wife Lucy, with Mike Pence and wife Karen (holding Malcolm Turnbull’s granddaughter Alice) at Kirribilli House on Saturday April 22 2017. With Turnbull’s daughter Daisy (far right) and her husband James Brown (far left), and Pence’s daughters Charlotte and Audrey.?? Photo: Twitter: Malcolm TurnbullRepublican elder statesman Senator John McCain is expected to meet Prime Minister Malcolm Turnbull in Australia within weeks, coming on the heels of a meeting with President Donald Trump in New York.
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The 75-year American alliance, trade and international security will be on the agenda as the former presidential candidate visits Sydney and Canberra as a guest of Sydney University’s United States Studies Centre.

Fairfax Media understands Senator McCain will deliver a keynote speech on America’s overseas alliances, following an invitation from the centre’s research director James Brown, Mr Turnbull’s son-in-law.

Part of a wider trip through Asia, the visit is planned for May and comes after US Vice President Mike Pence visited Australia last week.

Senator McCain, a former prisoner of war and 2008 Republican candidate for the White House, intervened in the diplomatic ructions caused by President Trump’s now infamous phone call with Mr Turnbull in January.

The two leaders clashed over a refugee people swap deal signed under the Obama administration, causing days of headlines about the usually rock solid alliance, seeing Senator McCain and other senior Republicans call out the president’s harmful treatment of Australia.

Mr Trump called the plan to resettle asylum seekers held in Australian detention on Manus Island and Nauru “the worst deal ever”.

A regular critic and target of Mr Trump, the respected Arizona senator later called Australia’s ambassador to the US, Joe Hockey, to express support for the alliance, including over military and intelligence cooperation and deployment on US Marines in the Northern Territory.

“I asked Ambassador Hockey to convey to the people of Australia that their American brothers and sisters value our historic alliance, honour the sacrifice of the Australians who have served and are serving by our side, and remain committed to the safer, freer, and better world that Australia does far more than its fair share to protect and promote,” he said at the time.

Senator McCain has been a regular host of Australian leaders in Washington DC and has visited Australia throughout his career, including to meet John Howard in Sydney in 2006.

The Turnbull government has been working actively to restore relations with Mr Trump and confirmed the pair would meet in New York next week, to mark the 75th anniversary of the Battle of the Coral Sea.

The meeting will take place on the aircraft carrier USS Intrepid, now a museum on the Hudson river.

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The biggest bet in town: who wins the war for Tatts

Friday, 3. August 2018

The Age 16/08/04 Business rlh040816.001.001 Tattslotto Generic. Tatts. Lotto. Lottery. Pic by Rebecca Hallas DIGICAM TATTS Photo: Rebecca HallasThe $11 billion battle to create Australia’s mega gaming and wagering group is starting to get interesting and by Friday, Tatts will decide which of the two players vying to acquire it has the superior offer. But at this stage neither has produced an offer that comes close to punching the lights out.
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Choosing between the two bids is a tough call because on paper the money being offered by Tabcorp – which started the bidding process in December – and the interloper Pacific Consortium are pretty similar.

On Monday, Pacific Consortium tweaked its proposal by offering to pay Tatts shareholders a dividend beyond the end of the 2017 financial year if the deal drags on.

In doing so it was not offering Tatts shareholders more upside – just limiting the downside of accepting its offer.

But Pacific Consortium isn’t even in the contest yet.

It needs to come up with an offer for Tatts that is superior in order to get a seat at the table because Tabcorp signed exclusive negotiating rights with Tatts unless someone comes up with a better offer.

Had Pacific Consortium meaningfully improved its offer the Tatts board would be obligated to let it into the tent and the bidding war could really begin.

Instead the consortium – made up of Morgan Stanley, Macquarie, KKR and First State – is being a bit cute. It is relying on Tatts shareholders that want competitive friction to get the auction started, to put pressure on the Tatts board to give them a seat at the negotiating table.

In doing so it is seriously turning the screws on the Tatts board to let it into into the auction.

But comparing the two offers is a tough call – they are not apples and apples.

If a Tatts shareholder accepts the Tabcorp offer, they will get some cash but mostly Tabcorp shares.

And the value of that offer moves with the Tabcorp share price.

The Tatts board also has to make a call on how much upside there will be once its business is combined with Tabcorp.

The Pacific Consortium offer is just cash.

Additionally Tabcorp needs to get regulatory approval from the Australian Competition Tribunal, which won’t happen until mid-June. While the betting is that it will probably receive a tick – it’s not certain.

Pacific Consortium members need to get through probity – which although more likely – is a process that can take up to a year.

Even if the Tatts board does declare Pacific Consortium’s bid superior that doesn’t mean Tabcorp will walk away. There are many reasons why Tabcorp is desperate to get is hands on Tatts. It needs Tatts’ wagering business to bulk up its TAB operations (Tatts owns most of the state-based TABs that Tabcorp doesn’t have and a merger would give it near-national coverage and all the operational and cost benefits that go along with that). Additionally Tatts is big in lotteries – a division that is lucrative and less subject to competition from corporate bookmakers.

The shareholders clearly think that one and possibly both of Tatts’ bidders have more in the tank and want them to be able to bid against each other.

Tabcorp doesn’t need to enhance its offer price until or unless the Pacific Consortium bid is deemed superior.

And while this corporate chess game is playing out the value of the offers for Tatts are going down rather than up.

When Tabcorp launched its initial offer it valued Tatts at $4.34 a share – compared with $4.27 its valued at now.

When Pacific Consortium made its original offer it was valued at between $4.40 and $5 compared with the $4.21 its offering now. Its original offer was never taken seriously given it was based on a whole series of rubbery synergy assumptions and the sale of the wagering business for a price beyond its worth.

Tatts is currently trading at $4.44 – well in excess of the price of either the current offers.

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Barangaroo launches new public park zone

Friday, 3. August 2018

A sweeping two-hectare public park, complete with waterfront walkway and new pier, will be some of the final pieces of the $6 billion Barangaroo development that will link the northern reserve to the office towers at the south-west end.
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It is the showcase of the project that the Barangaroo Delivery Authority, on behalf of the NSW government, says completes the design of Barangaroo South, as part of the authority’s commitment to delivering more than half of the area as open public space.

The final stage will be at Barangaroo Central. The Renzo Piano apartments are in Barangaroo South between the Crown resort and Hickson Road.

It is one of the biggest urban developments undertaken by Lendlease in Sydney and already more than 15,000 people are working, living and visiting the area with three office towers, apartments and waterfront restaurants. Retailer David Jones has said its new, smaller-concept store is breaking initial sales expectations.

Within the southern area there is also the new International House Sydney, the first engineered timber office building and the new home to advisory group, Accenture, once completed.

The new park space, due to open in 2021, swings past the front of the proposed Crown integrated resort development in the Barangaroo South precinct and will allow for meeting and eating spaces, free Wi-Fi and bike parking.

According to the landscape architects, Grant Associates, much focus has been on allowing the area to catch the northern sun, but be more sheltered from the wind and hot western sun.

Under the development application, which will be lodged with the Department of Planning and Environment, and available on public exhibition as part of the planning process, the new public spaces will be across five areas: Hickson Park, Waterman’s Cove, Wulugul Walk, Barangaroo Avenue and Waterman’s Quay.

The propsed Hickson Park will be one hectare of public parkland and is said to be modelled on Bryant Park in front of the New York Public Library.

Waterman’s Cove is the main area and is a fully accessible amphitheatre-style boardwalk on the water, which the developers expect will be a magnet for visitors and Barangaroo office workers. The extension to Wulugul Walk will be around the Crown Sydney Hotel Resort.

Craig van der Laan, chief executive of the Barangaroo Delivery Authority, said it was an “exciting proposal for the creation of more beautiful public spaces at Barangaroo, which will be of enormous benefit to the people of Sydney”.

“The new harbour cove and public park represent the next step in the extraordinary transformation of Barangaroo from a 22-hectare concrete container terminal into a world-class, vibrant waterfront precinct,” Mr van der Laan said.

Architect Bob Nation, the authority’s design adviser who has overseen the design development, said the plans provided extensive public benefit and a completely different park experience to Barangaroo Reserve and the waterfront parkland proposed for Central Barangaroo.

Rob Deck, Lendlease’s managing director of Barangaroo South, said the result would be the creation of a “truly exceptional public space”.

The final section of Wulugul Walk, which hugs Sydney Harbour along the entire length of Barangaroo, will be the link that will complete the 14-kilometre waterfront walk from Garden Island to the Fish Markets and will boast a 30-metre-wide waterfront promenade, with an additional nine metres beyond the Crown hotel podium.

Mr Deck said Barangaroo Avenue was Barangaroo’s “high street” and was a direct extension for the avenue that already runs through the existing financial and restaurant precinct. It is the primary north-south route through he area for cars and pedestrians.

Waterman’s Quay will be a “grand tree-lined boulevard”, creating a link between Hickson Road and the harbour, about 113 metres in length and 23 metres wide.

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Private equity sets a higher bar for former Spotless boss

Friday, 3. August 2018

131004 afr dixon pic josh robenstonefriday oct 4 2013bruce dixon ceo spotlessphoto by josh robenstone Photo: Josh RobenstoneAll the argy bargy over the $1.2 billion Spotless bid – a sum way below its 2014 valuation when it floated on the ASX – led CBD to wonder whatever happened to the man who made it all happen: Bruce Dixon.
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He was the guy who called in private equity backers, Pacific Equity Partners, to take Spotless private back in 2012 for $720 million. And returned it to the market less than two years later valued at $1.93 billion.

“What people don’t realise is that as a former Spotless executive I could see clearly how costs had blown out way too much at the company and took the opportunity to PEP,” he said post float in 2014. This was during that sunny period when the share price was above what investors paid in the float.

He departed in November 2015, having sold $12.2 million worth of stock, and promised his retirement wouldn’t involve anything more strenuous than a drink in one of the hotels in his son’s growing pub empire.

“I’m OK at drinking it. I’m not sure about the pulling of the beers,” he told CBD a few months before his departure.

“I’ll be one of these old guys who say ‘you know what I used to do, I used to do that – I used to be the CEO of Spotless’ and they’ll say ‘bullshit’.

“It will be a lot of fun. I’m at that stage of life. I’ve been doing this public company stuff for too long.”

But you can’t keep a performer like Bruce out of the spotlight for long.

A quick squiz at the latest accounts of the pub empire in question, Dixon Hospitality Ltd, reveals that Bruce was appointed its chief executive officer and managing director in October that year.

He retired as Spotless CEO on November 20, according to its annual report.

His son, Michael Dixon, is the head of corporate development for Dixon Hospitality, which is peppered with his dad’s old colleagues from Spotless.

Vita Pepe jumped ship from Spotless around the same time as Bruce and is a director of Dixon Hospitality. Spotless number cruncher Richard Sweetnam joined as company secretary.

In September last year another Spotless alumni, Paul Waterson, joined as the hotel group’s chief operating officer. The pub group was meant to be preparing for a sizeable IPO in the coming months.

Most of you will have heard that the public float has been postponed indefinitely while Bruce is in talks with – you guessed it – two separate private equity groups.

Which means that Dixon Hospitality might not make it to market. Given the performance of Spotless since its float, that might not be a bad thing.

The group told CBD a decision is expected within weeks. Road toll

With every passing day, President Donald Trump’s White House team finds more ways to love Australia.

In March he praised our “merit based” immigration system. Now Team Trump is finding lots to love about Australia’s model for financing public infrastructure with public-private partnerships as it tries to put together a $US1 trillion infrastructure program. The only one to fix the infrastructure of our country is me – roads, airports, bridges. I know how to build, pols only know how to talk!??? Donald J. Trump (@realDonaldTrump) May 13, 2015This story Administrator ready to work first appeared on Nanjing Night Net.

Furla buys back Australian business on soaring sales

Friday, 3. August 2018

Photo shows generic pics of Marcs store in Pitt Street Mall. SMH Business. 20040325. Photo by TAMARA DEAN/tkd SPECIALX 111111 Photo: Tamara Dean Luxury Retail Group (LRG) claims premium handbag-maker Furla’s decision to buy back its local stores is a vote of confidence in Australia’s rapidly expanding luxury retail sector.
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Furla Group sells its exclusive, Italian accessories through a network of 15 stores in Australia and the region’s sales have grown to represent 5 per cent of the brands’ annual, global revenue in less than four years.

Sales from Furla’s Australian and New Zealand stores are expected to increase by about 20 per cent in calendar 2017 to close to $40 million, less than 10 years after the brand withdrew from the region.

LRG would not reveal what Furla had paid it for the buy-back, but it’s already looking at new opportunities in this precious slice of the global retail market.

Sources close to the deal suggest the success of the Australian business forced Furla to buy back the business earlier than planned and the group’s chief executive Alberto Camerlengo said the group would open four new stores in Australia this year.

Research group IBISWorld suggests luxury retail sales are growing at more than 8 per cent a year in Australia, dominated by sales of clothing and footwear.

Through its partnership with the French Kering Group, LRG recently opened Australia’s first Balenciaga store and there are plans for several other boutiques in the near future.

LRG, which is based on a partnership between managing director Nelson Mair and Theo Poulakis, also operates luxury sneaker brand Sneakerboy, which will trade through a new, flagship store in the heart of Chadstone’s luxury precinct from later this year.

LRG’s annual revenue is approaching $100 million and it has ambitions to be Australia’s most successful luxury, retail operation.

Mr Mair points to Australia’s increasingly diverse population and the influence of Asian shoppers to explain the strength of the luxury fashion market.

He said the fashion market was growing strongly at both the premium end and at the other extreme, where fast fashion brands such as H&M were delivering on-trend designs at affordable prices.

Mr Mair, who previously worked at Australian fashion chain Country Road, said LRG had always targeted the top of the market.

“We’ve always felt that being in the middle of the market would be difficult,” Mr Mair said.

He explained the polarisation of the fashion retail sector as the result of consumers buying things “they really want or things they really need”.

“Beyond that, Australia has an enormous Asian demographic and their propensity to consume is a little bit different,” Mr Mair said.

“It comes back to a cultural aspect … they will define themselves or their success by what they wear, drive or consume.”

Six high-profile Australian brands have collapsed since December, with Myer swooping on troubled apparel brands Marcs and David Lawrence earlier this month amid mounting concern over how the apparel market will survive the imminent arrival of digital behemoth Amazon.

Iconic accessory brand Jimmy Choo will test market appetite for its coveted high heels after the coveted British label announced it was up for sale this week.

Shares in the listed business have jumped by 35 per cent in the past year, valuing the business at more than $1 billion.

Retail analysts warn the growth of luxury label sale in Australia is closely aligned to Sydney and Melbourne’s super-charged property markets, and investment in online technology and digital boutiques is making it easier for global brands to stake a claim in new territories at relatively low cost.

Blue Ocean Equities market portfolio strategist Mathan Somasundaram said online businesses were easy to scale and in some cases brands were testing the Australian market with stores that were virtually functioned as click and collect hubs.

He said this meant luxury labels had to invest more and more in the store experience to ensure the network was “sticky” enough to attract shoppers and keep them coming back rather than just browsing online.

The Retail Doctor’s Brian Walker said Australia’s luxury market had traditionally held up through economic peaks and troughs and the consolidation of the sector globally was likely to ensure ongoing corporate activity.

He said the biggest challenge for these labels in the short term would be finding suitable retail real estate in the major Australian capital cities.

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Nine urged to call stumps on cricket coverage

Friday, 3. August 2018

Cricket Australia is facing a major revenue crisis after global investment bank UBS urged broadcast partner Nine to axe cricket coverage because the network is losing up to $40 million every year televising the sport.
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Nine has broadcast cricket every summer since Kerry Packer famously bid for the sport in the late 1970s, and is renegotiating for 2018-2023 broadcast rights.

UBS media analyst Eric Choi believes Nine Entertainment Co should walk away from negotiations if Cricket Australia’s price is too high.

“The existing cricket deal costs Nine circa $100 million per annum,” he wrote in a note to clients. “We estimate the existing deal likely only generates gross revenues of $60-$70 million.”

“We think it would seem logical for Nine to enter negotiations with the following mindset: i) More cricket content at no additional cost, or ii) to step away from the cricket contract.”

A lack of a competitive bidding process for the TV rights would be a disaster for Cricket Australia, and comes as the sport attempts to re-sign all its major sponsorship contracts over the next 24 months. CA has already lost Victoria Bitter, and Commonwealth Bank is believed to have drastically cut its sponsorship from about $13 million to just $4 million. And KFC, which has been a major partner since 2003, will be renegotiating its sponsorship deal at the end of next year.

In addition, CA is in tough pay negotiations with cricketers, with an existing pay deal expiring on June 30.

Ben Amarfio, CA’s executive general manager for broadcasting, digital media and commercial, said “very positive discussions” with Nine about the next cycle of media rights had begun.

“We hope to begin formal discussions shortly,” he said. “We are not concerned that there will be a lack of interest for our media rights. Live sport, and cricket in particular, continues to be a premium asset.”

In 2013 Nine paid nearly $500 million for a five-year deal to broadcast international cricket on television exclusively. However, rival Ten secured rights to the Big Bash for just $20 million – a stunningly low price given how popular Big Bash Cricket has become in the past two summers. Nine’s director of sport, Tom Malone, last year said the network wants “everything” in the next rights deal.

“We want Test matches, we want one-dayers, we want [international] Twenty20s and we want the Big Bash,” he said.

A spokesman for Nine declined to comment.

Adding to Cricket Australia’s problems is that Ten is unlikely to bid competitively for the rights like it did in 2013 – when it offered $550 million – given its current financial position. The only remaining options are Seven, which already spends a fortune on live sports, or a publicly owned broadcaster like SBS or the ABC.

Sports bodies need competition between networks to reap high prices, according to chief executive of sports rights and sponsorship company Bastion Collective, Jack Watts.

“If Nine were to consider walking away from cricket that would create a precarious position for Cricket Australia because there would be absolutely no competitive tension in their rights negotiations,” Mr Watts said. “All rights deals are like an auction, all you need is two bidders. But if Nine decides it doesn’t want cricket, I don’t know what Cricket Australia is going to do to get an auction situation happening.”

Industry observers described any suggestion Nine abandoning cricket as a “nightmare scenario” for Cricket Australia while it is also juggling salary and sponsorship deals this year.

Mr Amarfio denied there was a looming revenue crisis at CA. “On the contrary, we haven’t had a number of sponsors depart,” he said. “We are currently in the process of re-signing some of our sponsors to bigger partnerships. The changes to our restructured program will pave the way for an additional premium partner that will see us having three key sponsors for men’s international cricket (Shirt, Test and Short form series sponsors).”

This story Administrator ready to work first appeared on Nanjing Night Net.