Starwood Capital Group, a leading private equity real estate investor based in Greenwich, CT, is buying seven of the eight non-core properties while the remaining mall will be sold in a separate transaction to an unnamed buyer.
"The proceeds from the transactions will initially pay down corporate debt and then be redeployed in higher return redevelopment opportunities in the U.S., including the World Trade Center," Westfield Group Co-CEO Peter Lowry said in a statement.
Westfield said Starwood formed a new retail platform that would acquire from Westfield majority interests in seven shopping centers, with a value of approximately $1 billion. Starwood would manage and control the platform with Westfield retaining a 10% holding. The Starwood transaction is expected to close in the second quarter.
The biggest properties are the SouthPark Center in Cleveland and the Solano Center, in Fairfield, Calif., at 1.66 million sq. ft. and 1.05 million sq, ft respectively. Starwood is also acquiring the Chicago Ridge in and Louis Joliet centers in Chicago, the Gateway in Lincoln, NE, the Westland in Miami, and the Metreon in San Francisco. Westfield said the centers have aggregate sales per sq. ft. of $373 and were 93.8% leased as of December 31. The figures exclude Metreon, which is currently under redevelopment.
The final center is Eastland, in West Covina, Calif, which Westfield described as a power center, with a l 844,297 sq. ft. in leaseable space. Westfield said it agreed to sell the mall at $147 million and the deal would close within 45 days. It said all eight assets were being sold at approximately current book values.
Sydney-listed Westfield has previously flagged the potential divestment of non-core assets in North America and, in February, announced it was selling a stake in a portfolio of 12 U.S. malls to Canada Pension Plan Investment Board for about $1.85 billion.
That deal was intended to free up cash to fund a share buyback of up to 10% and to expand its global reach. Two years ago, Westfield started to spin off properties in its domestic market, as part of a wider plan to earn bigger returns from managing malls and re-development.
The group has investment interests in 111 shopping centers across Australia, the U.S., Britain, New Zealand and Brazil. For the moment, its portfolio includes 48 shopping centers and with 57 million sq. ft. of leasable space in the U.S.
The group's shares closed up 3.38% on the Australian Stock Exchange, Wednesday, at A$9.17 ($9.5) a share.
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