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Westfield Group, the world's biggest shopping centre owner by market value, plans to raise £530 million ($1.37 billion) by selling stakes in four UK malls, giving it cash to build new projects that offer higher returns.
The sale means Westfield has raised more than A$7 billion ($7.7 billion) this year.
Two investors agreed to buy 67 per cent of a fund that will buy the stakes and Westfield will market the remainder to a wider group of buyers.
Westfield is seeking to tap economic growth in spending A$5.4 billion on the construction of 19 malls and plans to start building additional properties at a cost of more than A$9 billion over three years. New malls can deliver greater returns than existing ones.
"This is part of a very smart funding programme where they sell more mature assets at high prices and reinvest the money into the development pipeline," said Simon Garing, an analyst at UBS in Sydney. "For every A$2 billion they spend on development, they make A$1 billion of profit."
Westfield shares are trading around A$19.95, valuing the company at A$35.4 billion.
The new fund, Westfield UK Shopping Centre Fund, will have stakes in properties worth about £2.1 billion, including Merry Hill, which is worth £1.05 billion.
Westfield will manage the fund, which will pay £380 million to buy 25 per cent of Merry Hill, Belfast and Tunbridge Wells and buy a quarter of Westfield Derby once that centre is completed. Derby is expected to be worth a total of £600 million.
"We are excited to announce the initial closing of the fund, which provides a further source of long term capital," Westfield managing director Peter Lowy said. Westfield will continue to manage the malls as part of its portfolio of 10 UK properties worth about £3.9 billion.
- BLOOMBERG
