Westfield America Trust and Westfield Holdings Limited to invest US$125 million in Westfield America, Inc.
25 June 1998
Westfield America Trust and Westfield Holdings Limited todayannounced they would invest a total of US$125 million in WestfieldAmerica, Inc. (NYSE: WEA) as part of a US$200 million equityraising for the funding of the previously announced acquisition ofa major shopping centre portfolio from TrizecHahn (NYSE: TZH).
This equity raising involves the issue of convertible preferenceshares which are convertible into common stock at the equivalent ofUS$18.00 per share and have a dividend rate of 8.5% or the dividendpaid on Westfield America’s common stock, whichever is greater.These shares will be issued to:
– a new major US investor – Security Capital Preferred GrowthIncorporated: US$75 million;
– Westfield Holdings Limited: US$50 million; and,
– Westfield America Trust: US$75 million.
Westfield America Trust will fund its investment by raising atotal of A$118.4 million through the issue of 82.2 million units ata price of A$1.44. The issue has been underwritten by SBC WarburgDillon Read Australia Limited.
The US capital raising establishes an important relationshipbetween Westfield America, Inc., one of America’s leading owners ofregional malls, and Security Capital Preferred Growth, a prominentreal estate investment trust investor with significant resourcesand experience in the US property markets.
Westfield’s Managing Director USA, Peter Lowy, said, “After acareful analysis of all available options for financing WestfieldAmerica’s acquisition of the Hahn Portfolio, we have concluded thatthe issuance of new preference shares will provide the additionalcapital on financial terms that are most advantageous to WestfieldAmerica and its stockholders.”
Daniel F. Miranda, President of Security Capital PreferredGrowth, stated, “Westfield America, Inc. is indicative of the typeof real estate company in which we invest – a company with anexperienced management team, a highly-focused business plan, andsignificant prospects for value creation over the intermediateterm.” He added, “We are particularly impressed by WestfieldAmerica’s portfolio of outstanding shopping centres located in keyUS markets, and the company’s exceptional track record in shoppingcentre redevelopment and repositioning.”
As announced in April, Westfield America, Inc. is to acquire upto 13 centres on the West Coast for an allocated purchase price ofup to US$1.44 billion (including the assumption of debt). Thispurchase price has been reduced by US$48 million as a result of theprior right of first refusal on The Village of Corte Madera inCalifornia having been exercised by TrizecHahn’s current jointventure partner. The final price to be paid by Westfield America,Inc. will be dependent upon the interests ultimately conveyed atsettlement.
Westfield America, Inc. had previously arranged a short-termloan facility to fund the TrizecHahn acquisitions. The reliance onthis finance has now been significantly reduced through a number ofcapital raisings (including the one announced today) totallingapproximately US$600 million.
Westfield America, Inc. will arrange long-term borrowings whichtogether with the abovementioned capital raisings will complete thepermanent funding arrangements for the acquisition.
Westfield America, Inc. expects the first settlement to occur onJuly 31, 1998, to include five or six of the twelve regionalshopping centres. Subsequent settlements will follow with the finalone scheduled to occur in November 1998.
After the acquisition Westfield America, Inc. will have a totalof 37 centres in six major markets – St Louis; Washington D.C.;Connecticut; San Diego; Los Angeles and northern California.
The US$200 million capital raising is subject to the approval ofunitholders in Westfield America Trust and shareholders inWestfield Holdings Limited. Meetings of Westfield America Trust andWestfield Holdings Limited will be held in the coming weeks to seekthese approvals.
Security Capital Preferred Growth, a private real estateinvestment trust established by Security Capital Group Incorporated(NYSE: SCZ.B) in January 1997, makes non-control investmentsprimarily in the convertible securities of high potential publicand private real estate companies. Security Capital Group is aglobal real estate research, investment and operating managementcompany with interests in real estate operating companies having acombined total market capitalization of US$20.8 billion, andmanages US$3.8 billion in assets for real estate securitiesentities. The principal offices of Security Capital and itsdirectly owned affiliates are in Santa Fe, Amsterdam, Atlanta,Brussels, Chicago, Denver, El Paso, Houston, London, Luxembourg,and New York.