Westfield Divests 5 Malls Flash Report by FBIC Global Retail Tech

 Westfield Corporation Divests Five
US Shopping Centers for $1.1 Billion
Westfield MainPlace, Santa Ana, CA • The divested assets total more than 6 million square feet of retail space across four US states. • The proceeds of the transaction will fund the company’s US$11.4 billion development program, which includes the Westfield World Trade Center in New York planned to open in 2017. • The sale will also reduce the company’s gearing, or the debt-­‐to-­‐equity-­‐
capital ratio, by 3%, bringing it down to 29.2%. On Friday, Westfield Corporation announced the divesture of five noncore assets of its US portfolio. The properties are the Connecticut Post in Milford, CT; MainPlace in Santa Ana, CA; Hawthorn in Vernon Hills, IL; Fox Valley in Aurora, IL; and Vancouver in Vancouver, WA. The Australian company is one of the world’s largest shopping center operators, with iconic properties in London and New York. Westfield will use the proceeds to reduce debt exposure and to fund its US$11.4 billion development program, which will rebalance its portfolio to focus more on flagship properties. “Our strategic focus is to create and operate flagship assets in leading markets and divest noncore assets,” Westfield Co-­‐Chief Executive Peter Lowy said in a statement. The divested assets total more than 6 million square feet of retail space across four US states and are said to be operated at 97% occupancy. The shopping centers feature an array of fashion brands and retailers, with JCPenney and Macy’s serving as anchor tenants in all of the properties, and Sears present in all but one. DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 H K: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved. 1
Figure 1. Summary of Westfield’s Divested Assets Opened Location Size (000 Sq. Ft.) Store Count Anchor Tenants Connecticut Post 1960 Milford, CT 1,334 215 JCPenney, Macy’s, Sears, Target, Dick’s Sporting Goods MainPlace 1987 Santa Ana, CA 1,110 175 JCPenney, Macy’s, Nordstrom Hawthorn 1973 Vernon Hills, IL 1,196 180 Fox Valley 1975 Aurora, IL 1,405 150 Vancouver 1977 Vancouver, WA 883 140 Mall JCPenney, Macy’s, Sears, Barnes & Noble JCPenney, Macy’s, Sears, Carson Pirie Scott JCPenney, Macy’s, Sears Source: Company websites/FBIC Global Retail & Technology The buying side of the transaction consists of Dallas-­‐based Centennial Real Estate Company, Montgomery Street Partners in Washington and USAA Real Estate Company in Texas. Montgomery Street is an affiliate of investor Richard Blum’s San Francisco–
based Blum Capital Partners. USAA is a subsidiary of the USAA financial services company. Centennial will be the managing company responsible for the shopping centers’ daily operations. Westfield’s most recent investor presentation indicates that the sale will reduce gearing, or the debt-­‐to-­‐equity-­‐capital ratio, by 3%, bringing it down to 29.2%. Centennial CEO Steven Levi commented on the future plan for the properties, saying, “A mall can’t just be about shopping anymore. Understanding the needs of your market is the cornerstone of creating a one-­‐of-­‐a-­‐kind experience that guests can’t get online or anywhere else.” The divestiture comes at a time when shopping malls are undergoing an existential transformation from purely shopping destinations to experiential entertainment centers as operators seek to address evolving consumer demands and changing shopping behavior. Figure 2. Westfield’s Updated Portfolio in the US Source: Company websites/FBIC Global Retail & Technology DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 H K: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved. 2
Deborah Weinswig, CPA Executive Director—Head of Global Retail & Technology Fung Business Intelligence Centre New York: 917.655.6790 Hong Kong: 852.6119.1779 [email protected] Filippo Battaini [email protected] Marie Driscoll, CFA [email protected] John Harmon, CFA [email protected] Aragorn Ho [email protected] John Mercer [email protected] Shoshana Pollack [email protected] Kiril Popov [email protected] Jing Wang [email protected] Steven Winnick [email protected] HONG KONG: 10th Floor, LiFung Tower 888 Cheung Sha Wan Road, Kowloon Hong Kong Tel: 852 2300 2470 LONDON: 242-­‐246 Marylebone Road London, NW1 6JQ United Kingdom Tel: 44 (0)20 7616 8988 NEW YORK: th
1359 Broadway, 9 Floor New York, NY 10018 Tel: 646 839 7017 FBICGROUP.COM DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 H K: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved. 3