This article is from the Australian Property Journal archive
Westfield has set in motion chairman Frank Lowy’s strategy to grow the group by undertaking more than $1 billion worth of expansions and redevelopments of its properties in the United States and Australia and New Zealand.
Yesterday, Westfield announced that David Jones will open three new department stores at Westfield Burwood in Sydney, Westfield Chermside in Brisbane, and Westfield Doncaster in Melbourne.
Westfield’s $180 million expansion at Chermside will open in October 2006 with David Jones opening in August 2007. Upon completion, Chermside will be the largest shopping centre in Brisbane.
Since acquiring Chermside in 1996 for $127 million, the Group will have spent approximately $420 million on further development with the centre expected to be valued on completion at in excess of $1 billion. This equates to a total increase in capital value of over $450 million.
Meanwhile at Doncaster, the $400 million redevelopment planned is due to commence in early 2007 and is set to almost double the size of the existing centre. The addition of David Jones to the project, together with the existing Myer store, will reposition Doncaster as one of the premier fashion destinations in Melbourne.
A new David Jones store will be introduced into the existing space at Burwood, currently occupied by Myer. This is expected to take place in the first half of next year.
Westfield has also earmarked a $160 million redevelopment at Westfield Kotara, in Newcastle, New South Wales.
“We are very pleased to announce these deals which sees the introduction of a strong performing retailer like David Jones, further enhancing the quality of our centres in the Australian portfolio,” Westfield’s Australian managing director Robert Jordan said.
In its global portfolio, Westfield has unveiled a further three major redevelopments, with a $US220 million expansion at Westfield Galleria at Roseville in Sacramento, California; $US80 million expansion at Westfield Plaza Bonita, in San Diego, California and $NZ210 million ‘greenfield’ development at Albany in Auckland, New Zealand.
The Greenfield development at Albany is also the group’s largest development in New Zealand to date.
Westfield’s managing director Steven Lowy said the group continues to focus on expanding and redeveloping its centres globally which is both earnings accretive and delivers strong underlying capital growth.
The redevelopment projects are forecast to generate average initial income yields on cost in the range of 9-10% with unleveraged internal rates of return of approximately 14%.
The new projects announced add to the existing $A7.0 billion of projects currently underway across the group and form part of the $A1.5 – $A2.0 billion of new project commencements scheduled for the 2006 year.
In May this year, chairman Frank Lowy outline three plans to grow Westfield through the redevelopment of existing centres, building new centres and by acquisition of new centres.
Later in June, Westfield Group £140 million ($A347 million) for the Reuben brothers’ 50% stake and English firm Stanhope’s 25% stake in Stratford City development site in East London.
The Stratford City development is a £4 billion project and is the largest retail-led, mixed use urban regeneration project ever undertaken in the United Kingdom.
By Nelson Yap
