WESTFIELD AMERICA TRUST IN US$760 MILLION TRANSACTION TO ACQUIRE NINE SHOPPING CENTRES FROM THE RICHARD E. JACOBS GROUP
05 December 2001
Countries: United States
Westfield America Trust today announced an in-principle agreement to acquire nine regional shopping centres in the United States from The Richard E. Jacobs Group, – taking the Westfield America portfolio to 48 centres with total value of US$5.7 billion (A$11 billion) and 4.5 million square metres of retail space.
The aggregate consideration is US$756 million (A$1.45 billion) which involves the payment of US$40 million (A$76 million) in cash, and the issuance of US$210 million (A$400 million) in equity to the Jacobs Group as well as assumption of US$506 million (A$980 million) of non-recourse mortgage debt.
Westfield America Trust sought to raise A$200 million (US$103 million) through a placement of ordinary units underwritten by UBS Warburg. The market reaction to the placement was positive with A$75 million in oversubscriptions accepted for a total capital raising of A$275 million (US$142 million). This brought the total equity raised to A$675 million (US$349 million).
The centres are to be acquired at an initial yield of 9.75% and the mortgage debt has an average interest rate of 7.3%. The acquisition, which is expected to be finalised in the first quarter of 2002, will be accretive to Westfield America Trust’s earnings.
The portfolio being acquired consists of 900,000 square metres (9.7 million square feet) of gross leasable area located in six states. It has 36 anchor stores and approximately 1,150 specialty shops. The portfolio generates annual retail sales of more than US$1.9 billion with specialty store sales per square foot of approximately US$350 in the 2000 year.
The quality and location of the centres will complement Westfield America’s existing portfolio – four of the centres provide a new cluster in Ohio and another two add to Westfield America’s existing centres in Missouri and the state of Washington.
The acquisition will provide Westfield America with many management, leasing and redevelopment opportunities. The current average occupancy of the centres is 87%. This is below Westfield America’s average occupancy level of 94% which is at the top of the industry standard. Westfield has already identified 5 potential redevelopment projects in the properties being acquired.
Managing Director of Westfield America, Mr Peter Lowy, said: “There is significant potential to upgrade the portfolio through redevelopment and intensive management in much the same way as we did with the previously acquired CenterMark and TrizecHahn portfolios. In addition, it strengthens Westfield’s clustering strategy of acquiring properties that create or enhance multi-centre markets that offer growth.
“The portfolio is being acquired in a private transaction at an attractive yield which is not only accretive to earnings per unit, but which will lead to further capital growth in Westfield America’s assets.”
Chairman and CEO of the Jacobs Group, Mr Richard E. Jacobs, said: “I am pleased to have this opportunity to be associated with and have a significant equity investment in Westfield’s US operations” he said.