Westfield finalises joint venture for UK shopping centres

31 July 2000

Countries: United Kingdom

On May 15 this year, Westfield Holdings Limited announced it hadreached an in-principle agreement with MEPC plc to form a jointventure to purchase nine shopping centres in the UnitedKingdom.

Westfield and MEPC have now signed legally binding agreements topurchase the centres.

Westfield Managing Director Steven Lowy said: “This transactionmakes Westfield a significant participant in the UK shopping centreindustry and provides an excellent platform for further expansionopportunities in the UK and into Europe.

“While the transaction will not have a material effect onprofits in the short term, it is expected to make a positivecontribution to Westfield’s earnings in the medium to longterm.”

The joint venture will purchase the nine centres from MEPC for930 million ($A2.38 billion) and Westfield will be appointedto manage and develop the properties.

The nine shopping centres comprise 302,000 square metres ofretail space and about 650 retail outlets. They are located inprime town centre and urban locations.

It is a unique portfolio in the UK market with six of thecentres possessing significant redevelopment and growth potential.They are: The Friary, Guildford; The Eagle Centre, Derby;Castlecourt Shopping Centre, Belfast; Brunel Centre, Swindon; RoyalVictoria Place, Tunbridge Wells and Mill Gate Shopping Centre,Bury.

It is intended that the three remaining centres will be sold inthe short to medium term as they do not fit strategically into theportfolio. They are Yate Town Shopping Centre, Yate; Two RiversRetail Park, Staines and Kensington Shopping Arcade, London.

The purchase of the properties will be financed throughnon-recourse mortgage loans for approximately 640 million(A$1.64 billion) and equity of 290 million (A$740 million).Westfield’s half share of the equity contribution will be fundedfrom internal resources.

In addition, Westfield has been granted an option by MEPC,exercisable by 15 February 2001, to purchase MEPC’s 50% share ofthe six shopping centres which have significant redevelopment andgrowth potential. If this occurs, Westfield would not purchase theremaining three centres.

If Westfield exercises this option, the purchase price for thesix properties will be 667 million (A$1.7 billion).