Arc announced this afternoon the buy-back of its retail assets by the University, including the Block House, CLB, Quad and Arc Fresh store at UNSW Village. The announcement puts rest to rumours that have circulated since late last year that the University and Arc were negotiating to transfer retail assets in exchange for a long-term funding deal.
Arc CEO Brad Hannagan told staff that the University had revised its retail strategy and was aiming to extract full commercial rent from campus retail facilities, believed to be $1200 per square meter. Arc currently enjoys a reduced rate of $300 per square metre, with leases running until 2020. However, the buy-back would see retail transfered back to the University by the end of first session, 2012 in exchange for $11 million.
The compensation was believed to be double the forcast profit over that period of time. Further, Hannagan told staff the University had forcast a far more competitive commercial environment, which would have impacted on Arc retail revenues.
Natalie Karam, Chair of the Arc Board, said the campus was always a risky retail environment because of the 26 week trading period. She said the University had plans to open a further 4000 square metres of retail space in the future, irrespective of whether the Arc retail leases were given up or not.
Tim Kaliyanda, SRC President, told Tharunka that it was disappointing in terms of the immediate impact on students. “UNSW’s future plans for retail space on campus would have undermined Arc’s capacity to continue funding existing independent student support services and maintain the high-quality student experience it currently provides,” he said.
It was rumoured the board had originally held out for a higher compensation package, to secure additional SSAF funding and for a guarantee that Arc would have a presence on upper campus after exiting the CLB store premises. However, the Board unanimously approved the deal at yesterday’s board meeting. Hannagan said it would guarantee the future of the organisation beyond 2021. He said it would allow Arc to focus on student support and development.
It was announced there would be redundancies across all retail stores. “This decision has not come lightly and not without personal pain,” he said. Hannagan told the meeting he had spoken to the affected staff members. Tharunka spoke to several casual staff, who said they had yet to be told.