Some experts are predicting that Westfield Group's (ASX: WDC) World Trade Center (WTC) mall could become the company's greatest performing asset globally, where outstanding productivity is expected.
According to The Australian, the WTC shopping complex in New York City is set to become Westfield's "crown jewel" based on a report released by John Kim, a real estate investment analyst for CLSA. Kim believes that the development – which will cost Westfield roughly $685 million for its 50% stake – holds enormous potential for the company based on a number of factors.
Whilst a growing white-collar workforce and growing wealth in surrounding areas impressed Kim, he believes that 'the jewel in the crown' for the company will be its right to lease out the Oculus. Measured at 74,000 square metres, the Oculus is the main concourse of the new rail station and can be leased to host large public events and exhibitions.
It was further highlighted that, prior to Westfield taking over management of the precinct, the store returned over US$1,184 (when adjusted for inflation) in sales per square foot – smashing the company's average of US$485 for each of its other US interests. Kim noted that "the dynamics in the area are considerably stronger today, particularly the residential catchment", suggesting that returns per square foot could be substantially stronger in the future. Whilst Westfield Sydney currently holds the highest productivity rate with sales of US$1,324 per square metre, the new WTC mall is tipped to exceed that amount in future years.
Since the global financial crisis, Westfield has focused on strengthening its portfolio by divesting in non-core assets and using the proceeds to expand or redevelop its top performing stores. Currently, Westfield maintains an interest in 47 stores across the US and also operates in Australia, New Zealand and the UK, with its sights set on further global expansion.
Foolish takeaway
Whilst Westfield has already established itself as a powerhouse in the property sector, the company still has enormous growth potential. Meanwhile, its portfolio strengthening strategy should ultimately lead to greater shareholder returns as more cash is freed up. Priced at $11.40 per share and offering a dividend yield of 4.4%, this company could be an excellent addition to your portfolio!
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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.
