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Westfield earnings set to boost, say analysts

UBS analysts have expressed their optimism about shopping centre operator Westfield Group (ASX: WDC), which stands to be a key beneficiary of the falling Aussie dollar.

Currently, the blue chip owns properties in Australia, New Zealand, the US and UK. Following the effects of the global financial crisis, Westfield, along with its affiliate Westfield Retail Trust (ASX: WRT), has seen the necessity to sell off non-core assets and those which are underperforming expectations to instead focus on its better performing properties.

As the Australian dollar falls, UBS analysts have realised there is much more to like about the company, which will now be able to “enter into further US asset sales without further dilution”, according to Grant McCasker.

UBS has estimated that a 10% fall in value of the Aussie compared to US currency would increase the company’s earnings by between 3% and 4%, whilst a 10% movement compared to the British pound would increase earnings by a further 1.1%. Meanwhile, a weaker Australian currency could also boost domestic revenues if it supports discretionary retail spending.

Foolish takeaway

Having fallen by almost 10% in value over the last month, the company has begun to recover, unlike other real estate investment trusts (REITs). Westfield is currently trading at $11.56 per share and has recovered 5.4% since late last month. On the other hand, competitors such as Stockland (ASX: SGP) and GPT Group (ASX: GPT) are still sitting significantly below recent highs.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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