It’s been a tough month or so for shareholders of Westfield Corp Ltd (ASX: WFD). Its share price has fallen almost 10% since peaking at $10.49 in November. The shares are currently trading for $9.45, down 1.3% for the day.
While that might be a concern for some investors, others will (perhaps rightfully) recognise this as a good opportunity to initiate a position in the global shopping centre business, or else build upon an existing stake.
Indeed, Westfield Corp was created as part of the global Westfield Group restructure in June 2014. While the brand’s Australian and New Zealand assets were spun into a new entity known as Scentre Group Ltd (ASX: SCG), Westfield Corp is home to Westfield-branded shopping centres in the United States and United Kingdom. Notably, there is potential for expansion beyond those countries’ borders.
On an operating basis, Westfield appears to be performing nicely. In the financial year 2015 third quarter (3Q15), it achieved high sales productivity with annual specialty retail sales of $722 per square foot, up 7.1% on the prior corresponding period (pcp), while sales at its flagship stores were even greater at $892 per square foot, up 8.2% on the pcp.
Westfield’s focus on these ‘Flagship’ stores is one of the key reasons why the company is an attractive opportunity right now, in my opinion.
It has an enormous current and future development program ($11.4 billion, $6.3 billion of which Westfield is responsible for) which will see it revitalise a number of these malls in order to drive foot traffic in centres located in major cities, including New York and London. It will also continue to invest in new technology to enhance the shopping experience and could well offload some of its non-core assets to refocus capital on the bigger money-making projects.
It’s also worth noting that each of the figures mentioned previously is in US dollar terms. That means that whatever it earns is worth more to Australian investors thanks to the weak Australian dollar, which is currently sitting at just US 73.24 cents.
With a market value just under $20 billion, Westfield is unlikely to grow at spectacular rates anytime soon but the shares could still generate market-beating returns if things go according to plan – especially if the shares fall much further in the near-term.