Part sale of Westfield malls on cards to fund global growth
As long as it retains a 25 per cent stake in the malls, it will continue to get management fees.
Westfield has 39 shopping centres across Australia.
It holds a 50 per cent interest in 18 centres with joint-venture partners, including the listed Westfield Retail Trust.
The rest are owned by the Westfield Group at the minium 25 per cent threshold.
Brokers expressed doubt the group would sell down all the interests, but said that given its expansion plans overseas and the global $12 billion development pipeline, it was a good way to generate income.
Shares in the two entities rose on Monday after investors absorbed the impact of the sale on Thursday by the Lowy family's private investment fund of its 7.1 per cent direct stake in the Westfield Retail Trust.
Any sale in the Westfield Group's direct interest in the malls is unrelated to sales by the family's super fund. The family fund is run independently by the eldest son David and, like any any other super fund, it has interests in a range of sectors and companies.
According to JPMorgan's property analysts Rob Stanton and Richard Jones, the decision of a "long-term and wise investor to reduce its exposure to Australian shopping centres raises questions about the future direction of capital values".
"Westfield Retail Trust remains a captive vehicle to Westfield Group and the Lowys don't need to be invested in the trust to retain control of the assets," the brokers said.
"The management rights stipulate that Westfield needs to retain a 25 per cent holding in the assets to retain perpetual management rights.
"It could also be argued the Lowys' exit clears the path for the Westfield Group to sell down an additional 25 per cent in assets it owns 50:50 with Westfield Retail Trust," they said.
"If this occurred for all the Australian assets that Westfield owns 50 per cent of, it would be about a $4.3 billion transaction."
Frequently Asked Questions about this Article…
There is growing speculation that the Westfield Group may sell part of its interests in its Australian shopping centres to raise funds for its expanding global developments, while likely retaining at least a 25% holding to preserve management rights and fees.
Westfield owns 39 shopping centres across Australia. It holds a 50% interest in 18 centres with joint‑venture partners (including the listed Westfield Retail Trust), and the remainder are owned by the Westfield Group at or above the 25% threshold.
Brokers say selling part of mall interests could be a way to generate income to fund Westfield's overseas expansion and its reported global $12 billion development pipeline, although they doubt the group would sell down all its interests.
Under the management rights, Westfield needs to retain a 25% holding in assets to keep perpetual management rights and continue to receive management fees, so any sale would likely preserve at least that level of ownership.
Shares in the two Westfield entities rose on the Monday after investors absorbed the impact of the previous Thursday sale by the Lowy family's private investment fund of its 7.1% direct stake in the Westfield Retail Trust.
No. The article says any sale by the Westfield Group of its direct interests is unrelated to sales by the Lowy family's super fund, which is run independently by the eldest son David and holds a range of investments across sectors.
JPMorgan property analysts Rob Stanton and Richard Jones commented that a long‑term investor deciding to reduce exposure to Australian shopping centres raises questions about the future direction of capital values, noting the broader implications for the sector.
Brokers suggested that if Westfield sold an additional 25% in all the Australian assets it owns 50:50 with Westfield Retail Trust, the transaction would be about a $4.3 billion deal.
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