Westfield America Trust expands US portfolio after joint venture with Prudental plc

03 October 2002

Countries: United States

Westfield America Trust (ASX: WFA) and Prudential plc announced today that they have entered into a letter of intent for Westfield America to acquire a 50% interest in Fashion Square Sherman Oaks, Los Angeles, for US$67 million from a US affiliate of the United Kingdom’s Prudential plc.

Fashion Square is a regional mall with significant redevelopment potential, located in the heart of the San Fernando Valley and serving a primary trade area of 700,000 with a household income 35% above the LA average.

The letter of intent also provides for a US affiliate of Prudential plc to acquire up to a 50% interest in Westfield America’s Garden State Plaza, in stages:

  • an immediate 25% interest with a value of US$193.8 million made up as follows;
  • US$61.7 million in cash;
  • An unleveraged interest acquired by Westfield America Trust in Fashion Square Sherman Oaks (US$67.1 million); and
  • US$65.0 million in mortgage debt on Garden State Plaza.
  • a further 15% interest for US$116.3 million will be purchased between May 2004 and May 2005 for a combination of cash and mortgage debt; and,
  • an option for up to an additional 10% interest, for US$77.5 million, also exercisable between May 2004 and May 2005 for a combination of cash and mortgage debt.

The closing of the transactions is subject to a number of conditions, including due diligence and execution of definitive documents.

Westfield’s Managing Director, Peter Lowy, said the company was pleased with the transaction and with the opportunity to joint venture with Prudential plc.

“The transaction means Westfield America will increase its US portfolio to 62 centres, and increase to 12 the number of centres in the Los Angeles market,” he said.

“This fits well with our growth and clustering strategy and provides outstanding market synergies.”

The book value at December 2001 of Westfield America’s original 50% interest in Garden State Plaza was US$336 million which was increased to US$706 million following the recent acquisition of the remaining 50% interest as part of the Rodamco North America transaction. This compares favourably to the assessed value for the sale of US$775 million. “Following the sale to Prudential our remaining interest in Garden State Plaza represents the single largest investment in our US portfolio and this transaction provides us with additional cash resources for further expansion in the US,” Mr Lowy said.

Nick Thompson, head of fund management for Prudential plc’s real estate group in London, echoed Mr. Lowy’s enthusiasm. “Prudential plc is very pleased with the prospect of partnering with Westfield America. Westfield brings great leasing and property management expertise to Fashion Square as well as significant and meaningful scale in the Los Angeles retail marketplace. This also provides the opportunity for Prudential plc to geographically diversify our U.S. retail investment in one of the major fortress malls in the New York area,” Thompson said.

Fashion Square Sherman Oaks, a two-level regional mall located on the 101 (Ventura) Freeway in Sherman Oaks, California, a suburban area in the heart of the San Fernando Valley. The center currently encompasses approximately 848,000 square feet of Gross Leasable Area (GLA), with approximately 120 specialty shops and is anchored by Bloomingdales and Macy’s.

Westfield Shoppingtown Garden State Plaza is a premiere 2 million square foot super-regional mall located in Paramus, New Jersey, and is anchored by Nordstrom, Macy’s, JCPenney, Neiman Marcus and Lord & Taylor. It was built in 1957 and acquired by Westfield in 1986, with its latest expansion completed by Westfield in 1996, including the addition of Lord & Taylor, Neiman Marcus and 235,000 square feet of specialty store space.

Goldman, Sachs & Co. is advising Westfield America in this transaction, and J.P. Morgan Fleming Asset Management is advising Prudential plc.

Westfield America Trust (ASX: WFA) is the 2nd largest property trust listed on the Australian Stock Exchange. WFA owns a majority interest in the Westfield America portfolio of 62 centers, branded as Westfield Shoppingtowns. Westfield Shoppingtowns are home to more than 8,400 specialty stores in California, Colorado, Connecticut, Florida, Illinois, Indiana, Maryland, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio and Washington.

Prudential plc is one of the largest life insurance companies in the United Kingdom and a leading financial services group with operations in Europe, Asia and the United States (not affiliated with Prudential Financial of the United States).

This statement may contain certain “forward-looking statements” with respect to certain of Prudential’s plans and its current goals and expectations relating to its future financial condition, performance and results. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond Prudential’s control including among other things, UK domestic and global economic and business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition, inflation, deflation, the timing, impact and other uncertainties of future acquisitions or combinations within relevant industries, as well as the impact of tax and other legislation and other regulations in the jurisdictions in which Prudential and its affiliates operate. As a result, Prudential’s actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in Prudential’s forward-looking statements.