Australian property group Westfield in $1.3-bn US JV deal
26 March 2013
Westfield Group, one of the world's leading shopping centre owners, yesterday agreed to create a $1.3-billion joint venture with the US real estate developer O'Connor Capital Partners, by selling a 49.9-per cent stake in its six Westfield regional malls in Florida.
Westfield expects to make approximately $700 million in net proceeds from the deal.
Westfield Group co-chief executive officer Peter Lowy said, ''This agreement carries on the Group's strategy of introducing joint venture partners into our assets globally as well as disposing of non-core assets.''
O'Connor Capital Partners, established in 1983 is a privately held, independent real estate manager, owner, operator and developer.
O'Connor's investment in the Florida portfolio is equal to Westfield Group's book value. "Westfield will remain as property, leasing and development manager of the property consistent with the terms of the Group's other joint ventures," the company said in a statement.
The six malls are Westfield Brandon in Brandon, Westfield Broward in Plantation, Westfield Citrus Park in Tampa, Westfield Countryside in Clearwater, Westfield Sarasota and Westfield Southgate in Sarasota covering a total leasable area of almost 6 million square feet and 795 specialty stores.
The transaction is expected to complete in the third quarter of 2013, subject to customary closing conditions and regulatory approvals.
Analysts believe that Westfield will use the money for its global development and its announced share buy-back programme.
Since the announcement of the Group's 2012 results last month, the company has purchased 19 million shares under the buy-back programme for $212 million.
Sydney-based Westfield Group is a vertically integrated shopping centre group undertaking ownership, design, construction, asset management, leasing and marketing and employing around 3,800 people worldwide.
The Group operates one of the world's largest shopping centre portfolios with investments in 105 shopping centres across Australia, the US, the UK, New Zealand and Brazil with total assets under management of $67 billion.
During the past one and a half years, the shopping centre group has offloaded major stakes in its US, UK and Australian shopping malls to a range of private investors including London's Hammerson, the Canada Pension Plan Investment Board (CPPIB), Starwood Capital Group and the Group's own satellite Westfield Retail Trust.
The group divested 50 per cent stakes in its entire Australian and New Zealand shopping centre portfolio to Westfield Retail Trust.
The CPPIB bought a 45-per cent stake in 12 of Westfield's US malls, a portfolio valued at $4.8 billion.
According to analysts, the Florida sale is in line with the Group's strategy of increasing joint ventures to reduce capital employed and move towards a business that is more operationally leveraged.
On the back of the current sale, it is expected that the Group may further sell down its Australian and New Zealand assets to Westfield Retail Trust.