Westfield Should Mull $8 Billion Stocktake Sale, JPMorgan Says...

Westfield Should Mull $8 Billion Stocktake Sale, JPMorgan Says

By Ross Kelly
—Bloomberg News
Sometimes big isn’t always better, even for a company with a shopping mall in London that has enough floor space to cover 30 soccer pitches.

Westfield Group WDC.AU -1.08% has offloaded around $8 billion of assets over the past two-and-a-half years, and it’s sales don’t look like slowing down any time soon. At least according to J.P. Morgan JPM -0.52% analyst Rob Stanton, who’s identified another $8 billion of assets the shopping mall operator could put on the block.

Sydney-based Westfield has been selling older or poorer-performing malls to fund purchases of its own shares, which have helped boost its stock by 32% in the past year. Company directors were under pressure to do something after Westfield shares were in the doldrums for two years after the global financial crisis intensified in 2008.

Westfield also wants money to invest in more lucrative endeavors, such as the retail part of the new World Trade Center development in New York city, and to expand into new markets such as Brazil or continental Europe.

More asset sales already appear to be in train.

Citing people familiar with the matter, The Wall Street Journal revealed this week that Starwood Capital Group is in talks to buy seven U.S. malls from Westfield for more than $1 billion.

Mr. Stanton says well over that amount could be raised by bringing in joint venture partners to new developments such as the World Trade Center mall, slated for completion next year. He’s also flagged the possibility of Westfield reducing its interest in Westfield Retail Trust Ltd. WRT.AU -1.55% to 25% from 50%.

Westfield Retail Trust was created in 2010 when Westfield spun off a half-share of its Australian and New Zealand malls. It could raise around $5 billion by further reducing its interest in the malls to 25%, Mr. Stanton says.

“It could do the whole lot in one go, package small portfolios over a multi-year process or keep more of the best and sell 100% of the weaker assets,” Mr. Stanton muses.

However, Mr. Stanton reckons Westfield will approach dealmaking cautiously, and likely will sell only $2 billion of assets over the next two years.

Westfield executives are sure to be grilled on their intentions when the company holds its annual shareholder meeting in Sydney on Wednesday.

http://blogs.wsj.com/moneybeat/2013/05/24/westfield-should-mull-8-billion-stocktake-sale-jpmorgan-says/