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Westfield Sells Five U.S Malls for $1.1 Billion to Cut Gearing

  • Proceeds will also fund an $11.4 billion development program
  • Sale to reduce gearing by 3%, dilute FFO by 3.5 cents/security

Westfield Corp. has sold five shopping malls in the U.S. for $1.1 billion to reduce gearing and fund a property development program.

The sale along with another transaction in November would give Westfield about $1 billion in net proceeds, and reduce gearing -- its debt as a percentage of equity capital -- by 3 percent, the Australian owner of malls in U.S. and U.K. said in a statement in Sydney Monday. It will also dilute funds from operations by 3.5 cents a security, the company said.

Westfield will continue to hold a 20 percent interest in the five assets. The proceeds will also be used to fund the $11.4 billion development program that is estimated to yield 7 percent to 8 percent, Westfield said.

“Our strategic focus is to create and operate flagship assets in leading markets and divest non-core assets,” Co-Chief Executive Peter Lowy said in the statement. “Today’s announcement marks a significant milestone in our divestment strategy.”

Westfield shares dropped 2.2 percent to A$9.49 at 10:32 a.m in Sydney, trimming gains for the year to 5.2 percent. The benchmark S&P/ASX 200 index rose 0.1 percent.

The sale of the five shopping malls to a joint venture comprising Centennial Real Estate Co., Montgomery Street Partners and USAA Real Estate settled Dec. 18, Westfield said.