The Westfield Group (ASX: WDC) has announced that it has entered into two transactions. The first being an agreement to acquire two shopping centers in the Miami, Florida trade area: Broward Mall in Plantation, and Westland Mall in Hialeah. In the second transaction, the Group has agreed to divest four St. Louis, Missouri shopping centers: Chesterfield, Mid-Rivers, South County and West County. "These transactions complement our recent capital raising initiatives, consistent with our ongoing strategy of recycling capital," said Group Managing Director Peter Lowy.
Acquisition of Florida Properties
The Group has entered into a definitive agreement for the acquisition of Broward Mall located in Plantation, Florida, nine miles west of Ft. Lauderdale, and Westland Mall located in Hialeah, Florida, five miles north of Miami International Airport. The purchase price for the two centers is US $400 million (c. €270m), representing an initial yield of approximately 5.5%.
The seller of the two malls is SPG-FCM Ventures, LLC, a 50/50 joint venture between an entity owned by Simon Property Group, Inc. (NYSE: SPG) and funds managed by Farallon Capital Management, L.L.C. SPG-FCM Ventures, LLC acquired Broward and Westland Malls as part of its acquisition of The Mills Corporation in March of 2007.
Broward is an enclosed one-level 1.0-million ft² center with four anchors: Dillard's, JCPenney, Macy's and Sears, and 125 specialty stores. Specialty store productivity is approximately $470/ft² and the center is 89.4% leased.
Westland is an enclosed one-level 820,000-ft² center anchored by Macy's, Sears and JCPenney, with 96 specialty stores. Specialty store productivity is approximately $460/ft² and the center is 85.0% leased.
"We are pleased to expand our presence in Florida with the acquisition of these two centers, both of which have significant long term redevelopment potential," said Mr Lowy.
Divestment of St. Louis Properties
The Group has entered into two separate transactions with CBL & Associates Properties, Inc., (NYSE: CBL) with a minimum gross value of approximately US $1.04 billion, representing a premium to book value.
Westfield has agreed to sell Chesterfield Mall to CBL, and has separately agreed to contribute three centers 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 US $420 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," said Mr Lowy.
The four St. Louis area centres are currently on average 86% leased and have average sales of US $376/ft².
The Group completed a US $237-million redevelopment of West County in 2002, a US $63-million redevelopment of South County also in 2002, and a US $71-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%.
The transactions, expected to close within 90 days, will result in a dilution in the Group's operational segment earnings of A $15 million in 2008, and are expected to become accretive over the next three years. The distribution forecast of A$1.065 per security will not be affected for the 12-month period to 31 December 2007.