The Westfield Group (ASX: WDC) today announced it has entered into agreements to divest eight non-core shopping centres in the U.S. for US$1.154 billion. Starwood Capital Group will own the majority interest in seven of the centres while the eighth centre, Eastland, is being sold in a separate transaction.
“Today’s announcement represents a further step in our strategic plan to increase return on equity and long term earnings growth. The proceeds from the transactions will initially pay down corporate debt and then be redeployed in higher return redevelopment opportunities in the U.S., including the World Trade Center,” Westfield Group Co-CEO Peter Lowy said.
“We have previously flagged the potential divestment of non-core assets in the U.S. and this transaction is an important step in the repositioning of our portfolio to major retail assets with strong franchise characteristics.”
Starwood has formed a new retail platform that will acquire majority interests in seven shopping centres from Westfield with a value of approximately US$1.0 billion. Starwood will manage and control the platform with Westfield retaining a 10% interest.
The assets involved in the Westfield/Starwood transaction are as follows:
Center Name Location Lettable Area (sf)
Chicago Ridge Chicago, IL 838,608
Gateway Lincoln, NE 969,524
Louis Joliet Chicago, IL 971,025
Metreon San Francisco, CA 281,933
Solano Fairfield, CA 1,052,391
SouthPark Cleveland, OH 1,657,382
Westland Miami, FL 836,215
The centres have aggregate sales per square foot of $373 and were 93.8% leased as of 31 December 2011, excluding Metreon, which is currently under redevelopment with a new Target opening in the Fall 2012.
The Starwood transaction is expected to close in the second quarter of 2012.
Westfield has also agreed to sell Eastland, a power center in West Covina, California (lettable area of 844,297 sqft) for US$147 million. The Eastland transaction is expected to close within 45 days.
Transaction Impact on earnings
The transaction values are approximately equal with the current book value of the assets.
These divestments are expected to have an annualised dilutionary impact to the Group’s Funds from Operations (FFO) of approximately 2.0 cents per security, prior to the redeployment of capital and the impact of any buy-back of WDC securities.
The Group’s forecast distribution for the 2012 year of 49.5 cents per security remains unchanged.
The Westfield Group (ASX Code: WDC) is an internally managed, vertically integrated, shopping centre group undertaking ownership, development, design, construction, funds/asset management, property management, leasing and marketing activities and employing approximately 4,000 staff worldwide. The Westfield Group has interests in and operates one of the world’s largest shopping centre portfolios with investment interests in 111 shopping centres across Australia, the United States, the United Kingdom, New Zealand and Brazil, encompassing approximately 23,400 retail outlets and total assets under management of A$61 billion. In the U.S., the Group has a portfolio of 48 shopping centres that are home to more than 8,000 specialty stores and comprise approximately 57 million square feet of leasable space in California, Connecticut, Florida, Illinois, Indiana, Maryland, New Jersey, New York, North Carolina, Ohio and Washington.
This release contains forward-looking statements, including statements regarding future earnings and distributions. These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this release. You should not place undue reliance on these forward-looking statements. These forward-looking statements are based on information available to us as of the date of this presentation. Except as required by law or regulation (including the ASX Listing Rules) we undertake no obligation to update these forward-looking statements.
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