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Westfield acquires remainder of World Trade Center mall

Global shopping centre giant Westfield Group (ASX: WDC) has announced that it will wholly acquire the retail premises in its World Trade Center (WTC) site, located in New York, for US$800 million ($886 million).

Following the acquisition of the Port Authority of New York and New Jersey’s 50% interest in the project, Westfield will own 100% of the retail project, which the company expects to deliver strong sales in the future. In fact, in July The Australian stated that the WTC shopping complex was set to become Westfield’s “crown jewel”, particularly with a growing white-collar workforce in surrounding areas.

The centre will initially comprise of around 34,000 square metres of retail space but an additional 8,400 square metres will be added in the future when Tower 2 is developed.

The announcement came just one day after news that the company, along with its affiliate Westfield Retail Trust (ASX: WRT), plans to separate its international and Australian and New Zealand businesses to achieve greater growth and improve shareholder returns.

Whilst the shopping centres in Australia and New Zealand will become part of a new company to be known as Scentre, the WTC store and other international malls will form part of Westfield Corporation. Whilst it is subject to shareholder approval, this is due to come into being by mid-2014.

Westfield’s investment in the project reflects the company’s overall commitment to “provide an exceptional shopping experience to all who visit”, as stated by Port Authority chairman David Samson.

Foolish takeaway

Whilst the announcement of the split of Westfield’s assets excited investors, ratings agencies have become sceptical of the deal and are placing many assets under review for possible downgrade. It has long been thought that Westfield’s Australian assets are the company’s strongest, and that the split will hurt its international business due to lower asset quality.

However, given the level of investment in centres such as WTC or its stores in London, including Westfield London and its centre in Croydon, the assets will continue to grow in strength and should deliver strong returns in the future.

 

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

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