Westfield sells Brazil

Joint venture partner’s objectives “not aligned” in Brazilian shopping centre partnership.

a woman

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Westfield Group (ASX: WDC) announced yesterday that it has sold its 50% stake in its Brazilian shopping centre businesses.

Westfield said that the longer term objectives of its joint venture partner, Almeida Junior Family, were not aligned with Westfield’s and, as a result, decided to sell its portion “in line with book value”. The company was keen to enter the emerging market when it purchased the interest in the company only two years ago.

The investment, which included five malls in the south of the country, was expected to bring in significant revenue in coming years as the country is due to host the Soccer World Cup in 2014 and Olympic Games in 2016. However, Joint Chief Executive Steven Lowy hinted that the two partners were split by strategic differences.

Despite selling the interest for a loss of approximately $30 million, Westfield remains vigilant for any opportunities that may arise in the Brazilian market and the company still has executives and capital in the country. This tells investors that they are keen to deliver returns, which is particularly important as other property companies like Mirvac Group (ASX: MGR) and Peet (ASX: PPC) struggle in local property markets as the construction and mining booms finish up.

Westfield was eager to find new, emerging markets to begin operating in two years ago when it split its Australian and New Zealand businesses into a new fund, Westfield Retail Trust (ASX: WRT). The news of the Brazilian sell-off may be seen as a step backwards by many investors, however the company has already expanded in Milan and is cashed up, ready to build on its 100 plus stores throughout the world.

Domestically, Westfield is a property behemoth and with over $60 billion under management worldwide and over 1 billion visitors every year, the company is a great defensive stock that boasts a healthy dividend and growth prospects.

Foolish takeaway

Despite selling off its Brazilian stake (which represents less than 1% of the company), Westfield has shown time and again that it can deliver for shareholders. After returning gains in share prices for the past 10 years, if investors are looking for exposure to the property industry then they could do worse than have this Australian powerhouse in their portfolio.

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