Westfield Group Announces Transactions With Centro Properties Group and Somera Capital Management
09 May 2006
The Westfield Group (ASX: WDC) announced today that it has entered into agreements to divest eight (8) US non-strategic assets, raising US$550 million in separate transactions with Centro Properties Group (ASX: CNP) and Somera Capital Management.
?We have decided to divest ourselves of these non-strategic assets since they no longer fit within our investment criteria nor are they in our long-term redevelopment plans,? said Group Managing Director Peter Lowy. ?We are constantly reviewing our properties for opportunities to generate higher returns for our shareholders. The recycling of capital into higher returning developments is consistent with the Group?s long-term strategy and these transactions are similar to the sales last year of non-strategic properties in the United Kingdom: the Brunel Centre in Swindon and the Millgate Centre in Bury.?
The Group has entered into a series of agreements with Centro for the sale of two (2) centres and the contribution of an additional five (5) centres to new investment vehicles managed and controlled by Centro, with Westfield retaining a minority limited partner interest in the investment vehicles of approximately 5%.
The value of the seven centres to be transferred by Westfield reflects an initial cash yield of approximately 7%. Westfield will reinvest the proceeds in its redevelopment programme where the company generates 9%-10% initial cash yields and 14% unleveraged internal rates of return.
?We have a history of working well with Centro and are pleased that we were able to complete a transaction that is beneficial for both companies,? said Peter Lowy.
The Group has also agreed to sell Northwest Plaza in St. Ann, Missouri with a lettable area of 1,768,524 square feet to Somera Capital Management for US$47 million. The carrying value of Northwest Plaza as of 31 December 2005 was US$41.6 million.
The transactions are expected to close within 60 days and are subject to certain conditions which should be satisfied over the next 30 days.
The divestiture of these eight (8) centres will reduce gearing levels of the Group by approximately 80 basis points and will result in a slight short-term dilution of the Group?s operational segment earnings as the proceeds are being reinvested in higher yielding and higher quality developments.
The distribution forecast of A$1.065 per security will not be affected for the 12 month period to 31 December 2006.
The assets involved in the Westfield/Centro transaction are as follows (US$ millions):
Sale Properties
Centre Name Location Lettable Area (sq ft) Ownership
Interest Sale Price Carrying
Value
Enfield Square
Enfield, CT
720,366
100%
$ 88.9
$ 87.9
Westland
Lakewood, CO
476,829
100%
32.9
28.3
Contributed Properties
Centre Name Location Lettable Area
(sq ft) Ownership
Interest Contributed
Value Carrying
Value
Eagle Rock
Los Angeles, CA
456,959
100%
57.0
51.2
Midway Mall
Elyria, OH
1,103,881
100%
98.5
89.3
Richland Mall
Mansfield, OH
727,185
100%
51.2
52.9
West Park Mall
Cape Girardeau, MO
501,038
100%
64.3
63.6
Independence*
Wilmington, NC
1,007,294
77.5%
131.2
119.8
Total
$524.0
$493.0
*The contribution of the Group?s interest in Independence Mall is subject to the satisfaction of certain conditions, including obtaining final approval from an independent third party owner.
Notes to Editors:
Westfield Group
The Westfield Group (ASX: WDC), with a market capitalisation of approximately A$30 billion (US$23 billion), is the tenth-largest entity listed on the Australian Stock Exchange. Operating on a global platform, the Group is an internally managed, vertically integrated shopping centre group, undertaking ownership, development, design, construction, funds and asset management, property management, leasing and marketing employing in excess of 4,000 staff worldwide.
The Westfield Group has interests in an investment portfolio of 128 shopping centres valued in excess of A$51.5 billion (US$39.5 billion) located in Australia, the United States, New Zealand and the United Kingdom.
Centro Properties Group
Centro Properties Group specialises in the ownership, management and development of shopping centres. Centro has a market capitalisation of $5.4 billion and funds under management of $10.6 billion, comprised of retail property holdings in Australasia and the United States. Centro continues to maximise returns to investors through its customer focused and value adding team based approach. Please visit
www.centro.com.au
Anyway, I think it's going to take a huge redevelopment project to get people back to Northwest Plaza (Which will probably happen thanks to their new ownership). It's going to be interesting to see what ends up going on to the old mall.
