Westfield Shenanigans

One of the biggest decisions facing listed property fund managers is in determining the weight in the portfolio for both Scentre (SCG) and Westfield Corporation (WFD). These are the two largest trusts on the ASX and currently comprise around 38% of the ASX 200 A-REIT index, so a significant underweight or overweight will be a big driver of a manager’s performance.

Last year, Westfield Group (WDC) and Westfield Retail Trust (WRT) announced a proposal whereby their combined assets will be restructured along geographical lines.  Westfield’s Australian/NZ businesses were consolidated as Scentre Group (SCG) and their US and UK assets, including the Westfield World Trade Center in New York, Century City in Los Angeles and Westfield London were retained as Westfield Corporation (WFD). The investment thesis behind this quite costly move is that the market will rate the two separate companies more highly, and that offshore acquirers will now be more interested in Westfield’s global assets without the baggage of part ownership shares in Australian shopping malls. We note that Westfield Corp now trades at a PE ratio similar to US-based REITs such as the US$57 billion Simon Property.

In this piece we are going to look at the various permutations of Westfield over the years and follow the “pea” or the Westfield entities that have given investors the greatest returns over the last 35 years. Recently we have fielded a few questions about our positioning in the two former Westfield vehicles in the Aurora Property Buy Write Trust.

Read more here.


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