Westfield America Trust has increased its already extensive interests in
the US retail market with the $US67 million ($123 million) purchase of a 50 per
cent stake in Fashion Square Sherman Oaks, Los Angeles, from Prudential plc of
In a swap arrangement, the trust will sell Prudential a 50 per cent share in
its premier Garden State Plaza shopping centre, also in Los Angeles, for
Under the deal, Westfield America will undertake redevelopment of the Fashion
Square centre and re-brand it under the Westfield banner.
Fashion Square is a regional mall with significant redevelopment potential.
Set in the heart of the San Fernando Valley, it serves a primary trade area of
700,000 with an average household income 35 per cent above the average for all
of Los Angeles.
The sale of the 50 per cent interest in Garden State Plaza proceeds in
stages. Prudential gets an immediate 25 per cent interest in return for $US61.7
million in cash; half of Fashion Square Sherman Oaks; and a $US65 million
mortgage on Garden State Plaza.
Prudential will buy a further 15 per cent interest for $US116.3 million
between May 2004 and May 2005 for a combination of cash and debt; and has an
option to buy up to an additional 10 per cent interest, for $US77.5 million,
also exercisable between May 2004 and May 2005.
The deal lifts Westfield's portfolio of US shopping centres to 62 and marks a
handy increase in the value of Garden State Plaza.
The book value at December 31, 2001, of Garden State Plaza, based on
Westfield America's original 50 per cent interest, of $US672 million was
increased to $US706 million following the recent acquisition of the remaining 50
per cent interest as part of the Rodamco North America transaction.
The Prudential deal puts a value on Garden State Plaza of $US775 million, a
15.3 per cent increase in nine months.
Westfield managing director Peter Lowy said the company was pleased with the
opportunity to joint venture with Prudential plc.
Westfield America also owns the 99-year lease on the 44,000sqm of retail at
the former World Trade Centre site and is in the process of integrating the 42
Rodamco shopping centres it jointly bought earlier this year.