Global property giant Westfield Group (ASX: WDC) has taken advantage of improving market conditions in the US, announcing that it will divest seven of its non-core US shopping centres as it looks to strengthen its global asset portfolio and continue to generate greater shareholder value.
The latest sale, which will raise US$1.64 billion for the company, comes just days after the group announced that it, along with its affiliate Westfield Retail Trust (ASX: WRT), would sell their combined 33% stake in Perth's promising Karrinyup Shopping Centre.
Since the global financial crisis, one of Westfield's primary focuses has been to divest from non-core assets with nearby competition or limited development potential, and instead focus on investing in its most profitable stores. Westfield's co-chief executive Peter Lowy said "We are focused on redeploying our capital into superior retail destinations in major cities through divesting non-core assets and introducing joint venture partners into our high quality portfolio of assets."
Whilst the group will retain 10% of each of the centres – which are spread over Ohio, Washington State, California and Indiana – the remaining 90% will be purchased by Starwood Capital Group, which will also assume management of the properties.
When the transactions are complete, Westfield will still own and operate 40 shopping centres in the US and Starwood will have purchased a total of 14 shopping centres in the US from Westfield for a total of around US$2.6 billion over the last two years.
According to The Australian, the deal is US$120 million below the portfolio's book value at December but still in line with valuations at June.
Foolish takeaway
Westfield is the world's largest shopping centre group and is continually improving its strong grasp of the global market. With tough retail conditions expected to continue into the future, its move to improve its core and rid itself of poor performing assets should reflect positively on earnings and profitability well into the future.
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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.
