Westfield Group (WDC.AX), the owner and operator of shopping centres in Australia, the U.S., the UK and New Zealand, is reportedly in talks to sell off seven of its U.S. mall holdings to private firm Starwood Capital Group.
The deal, which has not yet been finalised and may still fall through, is thought to be worth over US$1 billion. Certainly, there is ample precedent: Just last year, Westfield sold controlling interests in seven U.S. shopping centres to Starwood for slightly over US$1 billion.
Ongoing strategy to downsize and maximize returns
It’s part of an ongoing strategy for the shopping centre giant. As The Australian Financial Review reported today, “Westfield has made no secret of its intention to downsize, sell non-core malls and focus on the management and development of prime flagship malls in global cities… The ultimate aim is to increase the return on capital invested”.
Westfield Group also recently exited its joint venture in Brazil, though Westfield co-chief Steven Lowy said, “We will continue to independently review opportunities in the region in line with our global operating strategy”.
While the Brazil deal was not expected to impact Westfield’s earnings, the divestments of U.S. assets could, at least in the near term.
Earlier this month, Westfield reconfirmed its 2013 forecast for funds from operations (FFO) of 66.5 cents per security and a distribution of 51 cents per security.
Beating the index — but is it a buy?
Year to date, Westfield Group shares have risen 14.5%, versus a 9% rise in the S&P/ASX 200 index (^AXJO) (XJO.AX), while shares of other ASX-listed property plays, such as GPT Group (GPT.AX) and Stockland Group (SGP.AX) have risen around 7% each.
Should the market start to cool on Westfield Group, opportunistic investors could get the chance to buy up shares of this blue chip on the cheap — or at least at a better price than today’s. Watch this space.
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Motley Fool contributor Catherine Baab-Muguira has no financial interest in any of the companies mentioned in this article. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.