Westfield Group
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Westfield Group is continuing its strategy to sell smaller US shopping centres, announcing the sale of eight shopping centres for $US1.15bn at a premium to book value (see Table 1). In a two-part transaction Starwood Capital Group will purchase a 90% stake in seven centres for $US1bn, while a small centre in West Covina, California has been sold for US$147m to a separate (undisclosed) buyer.
| Name | Location | Book value ($m)~ | Sale price ($m) |
|---|---|---|---|
| Starwood sale | |||
| Chicago Ridge | Chicago, IL | 133 | |
| Gateway | Lincoln, NE | 104 | |
| Louis Joliet | Chicago, IL | 115 | |
| Metreon | San Fran., CA | 50* | |
| Solano | Fairfield, CA | 192 | |
| Southpark | Cleveland, OH | 262 | |
| Westland | Miami, FL | 134 | |
| 990 | 1000^ | ||
| Other sale | |||
| Eastland | W. Covina, CA | 114 | 147 |
| *Estimated book value, currently being redeveloped | |||
| ^For 90% stake, ~ As at 31 Dec 11 | |||
The sale prices bode well for Westfield’s remaining US assets, and the US economy more broadly. Post-sale 'funds from operations', the group’s preferred measure of operating performance, will fall two cents per security but expect that to be regained once the capital is redeployed. Westfield reiterated its full year distribution guidance of 49.5 cents per security, placing it on a forecast yield of 5.4%
Westfield’s security price is up 4% since 22 Feb 12 (Hold – $8.80) and remains a tad too expensive to upgrade, for now HOLD.
Note: The model Income and Growth portfolios own Westfield Group securities.
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