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Westfield Corporation, the owner and operator of Westfield malls in the United States, Britain and Europe, has sold its Carlsbad mall in California to US listed mall owner Rouse Properties for $US170 million ($238 million) as it continues to divest non-core malls and focus on flagship centres in global cities such as New York and London.
The deal comes as Frank Lowy-chaired Westfield Corp announced that in the September quarter, specialty sales increased 8.1 per cent for its flagship holdings, while rising a more modest 4.6 per cent at its regional centres.
In October, Westfield Corporation said it has chosen all the retailers for the World Trade Centre in New York, fully leasing the $US1.4 billion development well ahead of its opening next year.
The 102,000-square-metre mall in the affluent seaside resort town of Carlsbad, about an hour north of San Diego, is leased to 150 retailers, including Macy's, Forever 21, LOFT and Victoria's Secret. It also has a 12-screen cinema.
New York-listed Rouse, which owns 36 malls in 21 US states, will rebrand the centre as The Shoppes at Carlsbad and undertake a comprehensive renovation.
The acquisition was funded through the issuance of $140 million of preferred operating partnership units to Westfield. These preferred equity units carry a five per cent coupon and are redeemable by Rouse Properties after a three-year lockout date, or by Westfield after 10 years, in the form of cash or common stock.
In the wake of Thursday's quarterly update, Macquarie Securities confirmed its outperform rating on Westfield with a 12-month price target of $12.13.
Rising bond yield
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WESTFIELDC STAPLED (WFD)
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Last updated: Sat Nov 14 2015 - 4:03:41 PM
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Company Profile
Real Estate Investment Trusts (REITs) (404020)
ASIC
ASX Announcements
13/11/15 Westfield Corporation Rouse Properties Media Release
12/11/15 Ceasing to be a substantial holder from AMP
12/11/15 Westfield Corporation - 3rd Quarter Update
5/11/15 Becoming a substantial holder from AMP
29/9/15 Westfield Corp Prices US$1.0B of Senior Guaranteed Notes
View all announcements
Analyst, Paul Checchin wrote that the Real Estate Investment Trusts, in general, were likely to underperform against a rising bond yield environment.
However, Westfield had the "potential for a value-affirming restructure"; it will have "material earnings" from apartment developments that are not yet factored into consensus; it has a currency tailwind with earnings in $US; and its net asset value will be supported "as the the development pipeline converts to prime retail assets."
UBS also has a buy on the stock.
Analyst Grant McCasker, described the metrics in Westfield's flagship centres as "best in class" and he is also looking for a re-rating of the stock.
Next May Westfield is expected to report back on the location of its long-term listing. At the same time, the next flagship project, the Westfield World Trade Centre will open in New York, increasing Westfield's brand in the US.
Read more: http://www.afr.com/real-estate/westfield-sells-californian-mall-to-us-reit-for-238-million-20151112-gkxzm1#ixzz3rRQVjxMW
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