Westfield (WDC) has slimmed down its involvement in the UK market by selling three of its smaller UK shopping centres for a profit of $1.1 billion.
The sale of the trio of centres to UK retail landlord Intu Properties, Merry Hill, Derby and Sprucefield, has been expected for some months by the market.
Westfield owned the Derby and Sprucefield centres out right and half the Merry Hill centre.
Intu properties bought the Westfield Centre in Derby, which opened in 2007, for 390 million pounds. It was put on the market last year. Westfield first bought a stake in the Derby centre in 1998.
It also bought the Sprucefield retail park in County Down for 69.8 million pounds and Westfield’s half share of the Merry Hill centre near Dudley for 407 million pounds.
Once other parties’ shares were deducted, Westfield’s share of the 867.8 million pounds total was 597 million.
Intu owns 12 shopping centres in the UK, including Manchester’s Trafford Centre and the Potteries in Stoke-on-Trent and two centres in Nottingham – the Victoria Centre and the Broadmarsh Centre.
The sales show that Westfield is continuing to reshape the Lowy shopping mall empire, regardless of the split in the group into two companies.
Scentre Group is being created to run the Australian and New Zealand malls.
Westfield Corporation will be formed to run the US, UK and new markets including a centre in Milan and Brazil and the company’s existing centres in London and a site at Croydon, also in London.
WDC 1Y – Westfield continues to reshape offloading UK malls
In a statement last night, timed to co-ordinate with the opening of the UK sharemarket, Westfield’s co CEO, Steven Lowy said the sales continued "the strategic repositioning of the international portfolio in line with our company’s focus on investing and operating iconic retail destinations in major world cities".
”Post completion of these divestments, the UK/European portfolio will comprise our two major London assets – Westfield London and Stratford, which are already two of the best retail destinations in Europe,’‘ Mr Lowy said.
”It will also include the major development opportunities at Milan in Italy and Croydon in London, which we expect to be amongst Europe’s top retail destinations."
He said the divestment of the three malls was expected to result in gross proceeds of $1.1 billion to Westfield.
Prior to that money being reinvested, the sales are expected to reduce gearing by 2.1% and would have an annualised dilutionary impact to the Group’s funds from operations (FFO) of about 2 cents per security.
Mr Lowy said the sales were expected to have a similar financial impact on the proposed Westfield Corporation. The transaction will not impact the proposed Scentre Group.
It is widely expected that when Scentre is formed, it will look at selling down its stakes in a number of malls across the country to 50 per cent, being the minimum required to retain the management rights of the malls.
That could unlock up to $2 billion in cash which would be used to redevelop the centres.
But big investors continue to complain about the estimated cost to security holders in Westffield Retail Trust who are being asked to accept a $1.8 billion reduction in net tangible asset backing.
The split will sees Scentre Group take charge of a $28.5 billion portfolio, while Westfield Corp will control $US17.6 billion of shopping malls throughout the UK, Italy, Brazil and the US.
