Westfield plays with CBL & Simon

WESTFIELD has dabbled in more than $US1.4 billion ($A1.65 billion) worth of purchase and sale transactions with CBL & Associates Properties and Simon Property Group.

In the first transaction, Westfield has bought two shopping centres, the Broward Mall in Plantation, and Westland Mall in Hialeah in Miami, Florida from SPG-FCM Ventures LLC, a 50/50 joint venture between an entity owned by Simon Property Group, Inc and funds managed by Farallon Capital Management LLC.

SPG-FCM Ventures, LLC acquired Broward and Westland Malls as part of its acquisition of The Mills Corporation in March of 2007.

Westfield will pay $US400 million for the centres, representing an initial yield of approximately 5.5%.

Broward is an enclosed one-level 1.0 million sq ft centre anchored by Dillard’s, JCPenney, Macy’s and Sears, and 125 specialty stores. The centre is 89.4% leased.

Westland is an enclosed one-level 820,000 sq ft centre anchored by Macy’s, Sears and JCPenney, with 96 specialty stores. The centre is 85.0% leased.

“These transactions complement our recent capital raising initiatives, consistent with our ongoing strategy of recycling capital,” Westfield’s managing director Peter Lowy said.

He added that both centres have significant long term redevelopment potential.

In the second transaction, Westfield has sold four St. Louis, Missouri shopping centres at Chesterfield, Mid-Rivers, South County and West County to CBL for $US1.04 billion, representing a premium to book value.

Westfield has agreed to sell Chesterfield Mall to CBL, and has separately agreed to contribute three centres to a new joint venture vehicle managed and controlled by CBL in return for a preferred minority limited partner interest in the joint venture having a minimum value of approximately $US420 million.

The group’s investment in the joint venture vehicle will be subject to certain redemption rights following the fifth anniversary of the closing.

“We are pleased to be able to complete these transactions with CBL, which allows us to better focus the Group’s management expertise into our US portfolio and extensive redevelopment pipeline,” Lowy said.

The four St. Louis area centres are currently on average 86% leased and have average sales of $US376 per sq ft.

The group completed a $US237 million redevelopment of West County in 2002, a $US63 million redevelopment of South County also in 2002, and a $US71 million redevelopment of Chesterfield in 2006.

The gross value of the four centres to be transferred by Westfield represents a yield of between 6.0% and 6.2%.

Lowy said the transactions will result in a dilution in the group’s operational segment earnings of $A15 million in 2008, and are expected to become accretive over the next three years. The distribution forecast of $A1.065 per security will not be affected for the 12 month period to December 31 2007.

Australian Property Journal