By Jenny Ruth
Tuesday 18th January 2011
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The restructuring of Westfield Group, which manages and half owns 12 shopping centres in New Zealand including St Lukes in Auckland and Queensgate in Lower Hutt, signals a shift in its geographic weighting to the US and Britain, says Scott Courtney, an analyst at Aegis Equities Research which is owned by Morningstar.
The restructuring saw the creation of Westfield Retail Trust (WRT), half ownership of the 54 shopping centres in Australia and New Zealand transferred to WRT and A$7.3 billion (NZ$9.4 billion) of capital distributed to Westfield shareholders in the form of new units in WRT.
Before the transaction, 51% of Westfield's assets were in Australia and New Zealand. After it, 64% are in the US and Britain.
"The shift in weightings to earnings and underlying assets to the northern hemisphere clearly sets the direction for the group's growth in the medium to long term," Courtney says.
"We acknowledge that there are short-term risks with this strategy, having regard to economic conditions in that part of the world at present which continues to lag behind Australia by up to 24 months," he says.
"However, compared to the maturity and saturation of the retail shopping centre market locally, there are far greater opportunities elsewhere."
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