Westfield Retail Trust (ASX: WRT) yesterday announced the major redevelopment of Westfield Miranda, located around 30km south of Sydney. The complex, which is jointly owned by the Trust (25%), DEXUS Wholesale Property Fund (50%) and Westfield Group (ASX: WDC), is already one of Australia's strongest performing shopping centres and is one of the Trust's best performing assets.
The redevelopment will see approximately 19,000 square metres added to the existing 108,000 square metres and will draw more and more customers in with sizeable upgrades for existing stores including Woolworths (ASX: WOW) and Myer Holdings (ASX: MYR), as well as introducing space for over 100 new specialty retailers.
Whilst the project is set to cost around $435 million (with the Trust's share of the costs equaling around $109 million), it comes as part of the group's strategy to focus more heavily on its best performing assets rather than attempting to milk lower performing stores for everything they're worth. Last month for instance, the group announced that it would expand its Garden City complex in Brisbane. Meanwhile, it decided to exit the Brazil market and is now in talks to sell seven of its U.S. mall holdings for a figure around the $1 billion mark.
Last week, The Australian Financial Review reported that "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".
Foolish takeaway
Westfield's approach to focus on developing their better performing stores whilst increasing cash-holdings through the selling of their underperforming assets is a good strategy. Just as in investing, sometimes the best companies to invest new money in are the companies already in your portfolio.
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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.
