The Scentre Group (ASX: SCG) share price is up 1.4% this afternoon after the operator of the Westfield shopping centres in Australia and New Zealand announced it will sell two Sydney CBD office towers to Blackstone Group for $1.52 billion.
Scentre Group CEO Peter Allen said: "We are pleased to have concluded this transaction with Blackstone. Together with the recent joint venturing of Westfield Burwood, Scentre Group has now released $2.1 billion of capital to further pursue our strategic objectives, creating long-term value for securityholders."
Scentre or Westfield's strategy has long been to divest or sell its relatively lower quality assets in part as a response to the rise of online shopping and as it looks to lift its return on equity, among other key operating metrics.
For example if it only retains prime shopping centre assets in major city locations as it's calculating theses are less likely to be affected by the rise of online shopping.
This is because foot traffic is always likely to visit prime locations in major cities as they're destinations as much as shopping centres, with Westfield increasingly focusing its offerings on dining and entertainment in these prime centres to attract foot traffic outside of retail shoppers.
As a result of the windfall from all its asset sales it today announced it's planning an $800 million share buy back that will help offset the earnings per share dilution from it selling profitable assets.
It's still forecasting total 2019 dividends of 22.6 cents per security, which places it on a 5.7% yield. This is likely to be attractive to conservative investors or retirees only looking to maximise their income. In fact if I were a retiree looking for income I'd probably prefer Westfield to the big banks like Commonwealth Bank of Australia (ASX: CBA) for example.
