Pension giants APG of the Netherlands and the Canada Pension Plan Investment Board (CPPIB) have created a joint venture to acquire 50% of the retail component of Westfield Stratford City at the site of the 2012 London Olympics.
Pension giants APG of the Netherlands and the Canada Pension Plan Investment Board (CPPIB) have created a joint venture to acquire 50% of the retail component of Westfield Stratford City at the site of the 2012 London Olympics.
The investment volume comes to £871.5 mln (just over EUR 1 bn) and values the retail component at £1.7 bn. As a result, Westfield Group (WDC) will achieve a development profit of approximately £300 mln (A$490 million).
WDC will retain full ownership of the adjacent non-retail development sites, where it has invested approximately £182 mln. The total value of the combined Stratford City site will be in excess of £1.9 bn.
WDC's yield on its remaining investment in the retail component of Stratford City is expected to increase from the current range of between 7% - 7.5% to in excess of 9%. WDC expects to achieve a total unlevered return on its invested capital in the range 15% to 20%.
Westfield Stratford City is one of the largest urban redevelopment projects ever in the UK and on completion in 2011 will be the largest urban shopping centre in Europe with 176,000 m2 of leasable area.
'On completion, Stratford City will be a landmark world class shopping centre, joining our iconic centres such as Westfield London and Sydney,' Westfield Group managing director Steven Lowy said.
'Today's announcement continues our strategy of creating value through the introduction of joint venture partners into our assets globally, at the appropriate time. Importantly, this transaction delivers, a year ahead of opening, the value and profit we have created through the development of Stratford City.'
Westfield Stratford City is the gateway to the London Olympic Park which will host the Olympic and Paralympic Games in 2012. Approximately 70% of the anticipated 10 million spectators will pass through Westfield Stratford City en route to the Park during the Games.
The centre will be anchored by John Lewis, Marks & Spencer, Waitrose and an all-digital Vue cinema and will include over 300 shops and 50 places to dine.
The transaction is expected to close in late 2011 and is subject to the project completing and opening. Fund manager, Henderson Global Investors is the investment management advisor to APG and CPPIB.