Westfield launches shopping centre fund

As reported in Property Week (15-06-07) Westfield has revealed details of a £530m fund with interests in four Westfield shopping centres.

The fund, to be named the Westfield UK Shopping Centre Fund, will own 25% interests in Westfield Merry Hill, Belfast and Tunbridge Wells and will purchase a 25% interest in Westfield Derby post completion of the redevelopment in October.

Westfield will retain its remaining 25% interest in the four centres.

The fund will enable Westfield to fund further developments including Stratford, Westfield London in White City and Nottingham.

The group has so far raised over A$7bn (£2.9bn) in the last 6 months through various transactions including the recent A$3bn (£1.2bn) rights issue.

Westfield will act as fund manager of the new fund and will continue to act as property, leasing and development manager for each of the centres.

Two investors have already taken 67% of the fund and the remaining third of the fund will now be marketed to a wider group of wholesale investors.

The fund will purchase its interest in the initial portfolio of Merry Hill, Belfast and Tunbridge Wells for around £380m, representing an initial yield to the fund of approximately 4.3% after costs.

The fund will buy a 25% interest in the completed Derby centre before October 2009. The price will be based on the annualised net income of the centre at the time of transfer capitalised at 5%, estimated to be around £150m.

The sale price for the 25% interest in Merry Hill of £262.5m is consistent with the price Westfield achieved for the sale of a 50% interest to Queensland Investment Corporation (QIC) in December 2006.