Westfield's relaunched Australasian shopping centre landlord Scentre Group is in talks to sell half its $2.6 billion New Zealand portfolio, either through a float on the New Zealand stock exchange or to global pension funds.
The $18bn company has been in talks with the Government Investment Corporation of Singapore and Canadian pension fund PSP, interested in buying 50 per cent stakes in the nine Westfield centres in Auckland, Hamilton, Wellington and Christchurch.
Investment bank UBS is understood to be working on plans for an initial public offering of half of the centres on the NZX, and JPMorgan could also be in the frame. The mooted plan remains consistent with Westfield’s global strategy to sell down stakes in its properties, but retain management rights, and comes as conditions remain buoyant for IPOs.
The proposed New Zealand company could be worth about $NZ1bn and offer a dividend yield of between about 6 per cent and 6.5 per cent. A dual listing on the Australian Securities Exchange could also be under consideration.
Scentre Group and UBS last week denied divestment options or an IPO for properties across the Tasman were planned. But sources indicated Scentre was working with the bank behind the scenes several weeks ago on what would be the first transformational step for the company since its split from Westfield in June.
It is believed Scentre wants to retain exposure to its remaining nine New Zealand properties, which were higher-yielding to those in Australia.
But a partial selldown creates the opportunity to reduce debt from its current level of 38 per cent. The property interests would be sold at a slight premium, a source said.
The company has been gradually selling down the assets it owns in New Zealand. In 2012, it sold two Auckland malls, including Shore City in the city’s North Shore for $65.4 million.
In a recent interview, Scentre chief executive Peter Allen said he would consider asset swaps and could create new unlisted funds on the back of a portfolio review.
Formed this year as part of Westfield’s radical overhaul of its $70bn global empire, Scentre Group controls 47 shopping centres worth $39bn in Australia and New Zealand. Its share of the ownership of the assets is $29.2bn.
Properties were previously jointly owned by Westfield Group and its listed satellite, Westfield Retail Trust.
As part of the restructure, the parent group sold its interest in the properties to WRT and the right to manage the centres. The newly merged entity was renamed Scentre Group, but the centres still retain the Westfield brand.
Last week, Scentre reported a 3.3 per cent rise in Australian specialty retail sales in its malls for the six months to June, compared with 0.8 per cent for New Zealand.
The speculation surrounding Scentre comes as UBS also advises The GPT Group on a $300m-plus IPO for its suburban office assets, with JPMorgan also securing an advisory role for the deal.
Last year, PSP and Charter Hall bought Westfield’s Karrinyup Shopping Centre in Perth while in 2007 GIC took a half interest in Westfield’s $1.4bn Parramatta centre in Sydney.