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Should you buy, sell or hold the new Westfield Corp?

The newly formed Westfield Corp (ASX: WFD) now manages Westfield’s iconic shopping centres in the United States and Europe, with an intention to grow worldwide through more developments in the world’s major cities. The timing of Westfield Corp’s strategic realignment seems a happy coincidence (or not), as it is just after the US and UK economies appeared to start a strong rebound. This rebound has the potential to deliver big rental increases and better sales performance in the new entity’s core markets.

Westfield Corp’s overall vision is to cater to the shopping, entertainment and dining needs of consumers worldwide, as it pioneers the evolution of modern shopping as a destination experience. This primarily in response to online headwinds some believed would see shopping centres decline in popularity.

The other part of the vision is to concentrate on iconic shopping centres in the world’s major cities, with a focus on premium brands and retailing. Step up the new Westfield World Trade Centre, New York, scheduled for completion in 2015. It’s not alone and the new Westfield Corp has a huge development pipeline including other centres in Milan and London, which means the stock’s outlook is tilting towards growth as well as income. That’s reflected in the fact that at $7.38 it trades on around 17.5 times projected FY14 earnings.

The distribution in FY 2014 is forecast to be US24.6 cents per security, so selling for $7.38 that’s an approximate FX-adjusted yield of 3.8%. Income-focused investors should note distributions will be paid in U.S dollars so with the Reserve Bank of Australia’s governor warning the Australian dollar is significantly overvalued, steady depreciation may prove another nice tailwind.

Overall I think the new entity looks a solid long-term buy for investors seeking security, income, and a touch of growth. The Australian and New Zealand assets are now part of Scentre Group Ltd (ASX: SCG), while other large property operators like Mirvac Group (ASX: MGR), Stockland Corporation Ltd (ASX: SGP) and DEXUS Property Group (ASX: DXP) remain alternatives for domestic investors.

Westfield Corp was once a small business Frank Lowy was just getting going. Another small but fast-growing business directors have been buying shares in recently, which the boss also has a large stake in, has been fingered as having a bright outlook on a great valuation.

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Motley Fool contributor Tom Richardson owns shares in Westfield Corp and Scentre Group. You can find him on Twitter @tommyr345

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