Talk grows of Westfield sell-down
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 Westfield Group at the 25 per cent threshold.
Brokers have expressed doubt the group would sell down all the interests, but said given its expansion plans overseas and the global $12 billion development pipeline, it was a good way to generate income.
Shares in the two groups 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 of Westfield Group's direct interest in the centres is unrelated to sales by the family's super fund. The family fund is run independently by the eldest son, David, and, like any other super fund, it has interests in a range of sectors and companies.
According to JP Morgan's 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 management rights stipulate Westfield needs to retain a 25 per cent holding in the assets to retain perpetual management rights," the brokers said.
"It could also be argued the Lowys' exit clears the path for Westfield Group to sell down an additional 25 per cent in assets it owns 50:50 with Westfield Retail Trust. If this occurred for all the Australian and NZ assets [which] Westfield owns 50 per cent of, it would be about a $4.3 billion transaction."
Frequently Asked Questions about this Article…
Speculation has grown that Westfield Group could sell down interests in its Australian shopping centres to raise funds for its expanding global developments. The reports describe this as a potential sell-down strategy, not a confirmed corporate decision.
Westfield has 39 shopping centres in Australia. It holds a 50% interest in 18 centres (in joint ventures, including with the listed Westfield Retail Trust) and the remaining centres are held at about a 25% ownership threshold by the Westfield Group.
Yes. According to the article, Westfield will continue to be paid management fees as long as it retains at least a 25% stake in the properties, because the management rights require that holding to retain perpetual management rights.
Brokers estimate that if Westfield sold an additional 25% interest in all the Australian and New Zealand assets it currently owns 50:50 with Westfield Retail Trust, the transaction could be roughly a $4.3 billion deal.
No. The article notes that any sale of Westfield Group’s direct interest in centres is unrelated to sales by the Lowy family's super fund. The Lowy family's private investment fund did sell a 7.1% direct stake in Westfield Retail Trust, but that sale is run independently and is separate from Westfield Group actions.
Shares in Westfield Group and the related trust rose on the Monday following the Lowy family's private investment fund sale of its 7.1% direct stake in Westfield Retail Trust, after investors absorbed the initial impact of that Thursday sale.
JP Morgan analysts Rob Stanton and Richard Jones said a long-term investor reducing exposure to Australian shopping centres raises questions about the future direction of capital values. Brokers also expressed doubt Westfield would sell down all its interests but noted selling could be a pragmatic way to generate income for expansion.
The article says a sell-down would be a way to raise funds to support Westfield’s expanding overseas developments. Westfield has about a $12 billion global development pipeline, so proceeds could help finance that growth.
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