Westfield raises EUR 780 mln in UK mall joint venture

The Westfield Group, Australia's listed shopping centre giant, has raised A$1.3 bn (EUR 780 mln) by the sale of a 50% interest in the Merry Hill shopping centre in the UK to the Queensland Investment Corporation. The joint venture has appointed Westfield as the property, leasing and development manger for the Birmingham mall.

Merry Hill is one of the largest shopping centres in the UK with an area of approximately 150,000 m². Its tenants include Debenhams and Marks and Spencer department stores, supermarkets Asda and Sainbury and over 250 specialty shops. There are also 8,000 parking spaces.

Westfield purchased its 100% interest in Merry Hill as part of the Chelsfield/Duelguide acquisition in December 2004 for £875 mln (about EUR 1.3 bn). A further £16 mln in capital expenditure has been incurred since then, and the total transaction value of £1.048 bn includes development land valued at £58 mln.

The implied centre value of £990 mln represents a current income yield (on 2006 income after management fees) of 4.3%. This exceeds the total cost of £891 mln and the current carrying value of £936 mln, Westfield said.

Westfield specialises in the management, leasing, development, design, construction, and funding of shopping centres. It has about £23 bn (EUR 34 bn) of assets under management in a portfolio of 121 shopping centres in the UK, US, Australia, and New Zealand. This portfolio amounts to more than 10 million m² of retail space and houses more than 22,000 retailers.

Queensland Investment Corporation, which trades as QIC, is Australia's second largest wholesale funds manager with over A$50 bn (EUR 29 bn) in funds under management for a range of public and private sector clients.