Westfield Holdings expands into United Kingdom
22 February 2000
Countries: United Kingdom
Westfield Holdings announced today that it has been selected asthe preferred joint venture partner and developer for theBroadmarsh Centre in Nottingham, England. The value of the projecton completion is estimated to be more than $1 billion (400million).
The Broadmarsh Centre is Westfield’s first venture in the UnitedKingdom and represents a major geographic diversification for theWestfield Group as part of its global shopping centre strategy.
Westfield was selected for the joint venture from a list ofcandidates by the current owner of the centre, the Post OfficeStaff Superannuation Scheme (“POSSS”). The selection of Westfieldfollowed a recommendation from the scheme’s adviser, Hermes, one ofthe leading fund management organisations in the United Kingdomwith $100 billion (40 billion) of funds undermanagement.
Westfield and Hermes plan to significantly redevelop and expandthe existing centre so that it will become the pre-eminent retaildestination in the East Midlands. Nottingham City Council hasresolved to grant outline planning consent to create a regionalshopping centre of approximately 116,000 square metres (1.25million square feet), including two department stores.
Westfield will be appointed by the joint venture as developer,property and asset manager for the Broadmarsh Centre.
Westfield Chairman, Mr Frank Lowy, AC said:
“We are delighted that Westfield’s expertise in shopping centremanagement and development enabled us to be selected for this jointventure from a highly competitive, international field. This is assignificant a development for the Company as its 1977 entry intothe United States shopping centre market.
“The Company has investigated several opportunities in the UnitedKingdom market over many years. This investment in the BroadmarshCentre is the result of a long-term strategy and provides us withan excellent platform for expansion in the United Kingdom andEurope.”
Hermes Property Asset Management Limited Chairman, Mr RichardHarrold, said:
“We have been considering entering into a joint venturearrangement to undertake this substantial and exciting projectsince early 1999 and held discussions with a number of substantialUK and international shopping centre developers/owners. Inselecting Westfield, we will be working with one of the largestshopping owner/developers in the world with considerable experiencein creating large in-town centres.”
Westfield Holdings has agreed to pay 53 million($132 million) to acquire a 75% interest in the existing shoppingcentre with POSSS retaining a 25% interest. The redevelopmentproject will also be shared on a 75:25 ownership basis. As part ofthe transaction, Westfield will issue options over 8 millionWestfield Holdings shares to POSSS at an exercise price of $8.74 ashare, representing a premium of 5% above the closing price onFriday, 18 February.
The joint venture partners will fund the cost of the projectthrough their internal resources and a non-recourse mortgageloan.
Westfield Managing Director, Mr Steven Lowy, said:
“Westfield is looking forward to working closely with Hermes asa joint venture partner. We believe our respective skills arecomplementary and ideally suited to the project. Westfield has agreat deal of experience in redeveloping shopping centres incomplex, busy urban environments on tight sites close to transportand infrastructure hubs.
“The zoning policies of the UK Government restrict the developmentof out-of-town centres and encourage redevelopment of existing towncentres in order to maintain their integrity and vibrancy and toutilise existing infrastructure. This particularly suits Westfieldas we have expertise in the redevelopment of existing towncentres.
“The redevelopment skills we have refined particularly in Australia- since the Company’s early days at Burwood, Hornsby andIndooroopilly and more recently at major projects at Parramatta,Miranda and Chatswood – will be applied effectively to theBroadmarsh Centre.”
The City of Nottingham is located in an expanding catchment areawith a population of more than 1.1 million people. The populationis estimated to grow by 3.8% over the next decade, a rate that isgreater than the forecast national average.
The existing Broadmarsh Centre occupies 47,600 square metres(512,000 square feet) of retail space, anchored by an Alldersdepartment store.
Heads of terms have been agreed and the transaction is subjectto the finalisation of legal documentation.
Westfield is one of the world’s largest shopping centreorganisations with shopping centre assets under management valuedat $17.8 billion. The group’s existing portfolio includes 81shopping centres in Australia, the United States of America, NewZealand and Malaysia with 12,750 retailers occupying 5.8 millionsquare metres of retail space.