Westfield Corp: Interim result 2015

The potential value of Westfield Corp's US$11.4bn development pipeline can be seen in its new flagship mall at the World Trade Center site in Manhattan. Costing US$1.4bn, the group has targeted a yield of 6.5% upon completion (which has been pushed back to the 'first half of 2016' due to construction delays).

Westfield Corp's other flagship malls in the United States had an average capitalisation rate of 4.92% at 30 Jun 15. Assuming similar capitalisation rates going forward, this means Westfield World Trade Center, with its yield of 6.5%, should be worth considerably more than its cost once completed. So as well as boosting distributable income, it should also provide a nice bump to current net tangible assets per share of approximately AUD$5.32.

Although Westfield World Trade Center is nearing completion, the group started redeveloping its flagship Century City mall in Los Angeles and UTC in San Diego (another flagship mall) in the first half of 2015. Both have targeted yields between 7% and 8% and the group now has US$3.8bn of projects under construction.

Including the interim dividend of US$0.1255 (ex date already past), Westfield Corp expects to pay a full year distribution of US$0.251 per security for an unfranked forward yield of 3.6%. The stock is up 4% since Westfield 2014 AGM on 15 May 15 (Hold — $9.35) and remains a HOLD.

Disclosure: Staff own shares in Westfield Corp but they don't include the author.