Part sale of Westfield malls on cards to fund global growth
SPECULATION is gaining momentum that the Westfield Group may sell part of its interests in shopping centres across the country to raise funds for its expanding global developments.
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."