Westfield offloads 50% of Stratford City
Shopping mall landlord Westfield Group (ASX:WDC) today announced an agreement to sell a 50 per cent interest in the retail component of Westfield Stratford City for GBP 871.5 million ($A1.41 billion) to a new joint venture comprising APG of The Netherlands and Canada Pension Plan Investment Board (CPPIB).
Westfield said in a statement today the transaction values the retail component at 1,743 million (A$2,850). As a result, it will make a development profit of approximately GBP300 million ($A490 million).
Westfield will retain full ownership of the adjacent non-retail development sites, where it has invested approximately GBP182 million (A$298 million) and which are expected to create significant additional value over time. The total value of the combined Stratford City site will be in excess of GBP1,925 million (A$3,148 million).
The realised development profit of approximately GBP150 million will be added to the company's future retained earnings. The unrealised GBP150 million component will be recognised as development valuation gains.
"On completion, Stratford City will be a landmark world class shopping centre, joining our iconic centres such as Westfield London and Sydney", Westfield Group Managing Director Mr Steven Lowy AM said.
"As a result, the Group will significantly improve its return on invested capital from the development, and will remain a long term investor, property manager and developer of this landmark shopping centre," he said.
The company said its yield on its remaining investment in the retail component of Stratford City is expected to increase from the current range of between 7 per cent - 7.5 per cent to in excess of 9 per cent. It expects to achieve a total unlevered return on its invested capital in the range 15 per cent to 20 per cent.
The transaction is slated to close in late 2011 and is subject to the project completing and opening.
By 1025 AEDT, Westfield shares lifted 0.93 per cent at $11.93, against a 0.7 per cent rise in the benchmark index.