Westfield Group is to sell half of its interest in the retail component of the property group’s Stratford City centre in the UK for 871.5 million pounds ($1.41 billion).
Westfield will gain a development profit of around 300 million pounds ($490 million) after the sale of the centre in London’s east to a new joint venture of APG of the Netherlands and Canada Pension Plan Investment Board (CPPIB).
The property group will retain full ownership of the adjacent non-retail development sites.
‘‘Today’s announcement continues our strategy of creating value through the introduction of joint venture partners into our assets globally, at the appropriate time,’’ Westfield Group managing director Steven Lowy said in a statement on today.
‘‘Importantly, this transaction delivers, a year ahead of opening, the value and profit we have created through the development of Stratford City.
‘‘As a result, the Group will significantly improve its return on invested capital from the development, and will remain a long term investor, property manager and developer of this landmark shopping centre.’’
Westfield said the realised profit of around 150 million pounds would be added to the group’s future retained earnings while an unrealised 150 million pounds would be recognised as development valuation gains.
The group’s development of Stratford City, a 1.9 million square foot retail and entertainment complex, is next to the site for the 2012 Summer Olympic Games.
The centre was scheduled to open in the third quarter of 2011, with around 75 per cent of the retail area either leased and committed, Westfield said.
The deal will also cut Westfield's gearing by 2 per cent.
The sale will have little impact on its operating earnings per share forecast of 74.6 cents in 2011.
The Stratford sale and Westfield's spin-off are all designed to help perk up the group's shares which have dropped 5.7 percent to $11.82 so far this year, down slightly more than the broader market.
AAP, with Reuters