Westfield Finds Canadian Partner for U.S. Malls

Australian mall owner Westfield Group has agreed to sell a 45% stake in 11 U.S. shopping malls and one mall-development site to the Canada Pension Plan Investment Board for nearly $2.2 billion, setting a benchmark for the value of high-quality malls that rarely trade hands.

The deal is among the largest real estate transactions ever for CPPIB, which oversees roughly $153 billion of assets, including $14.4 billion of real-estate investments. Sydney-based Westfield, which owns 55 malls in Australia and New Zealand and 55 in the U.S., will continue to manage the 12 properties as their majority owner.

The deal amounts to an initial annual yield of 5.6% for CPPIB, with the portfolio valued at $4.8 billion. Included in the portfolio are Westfield Annapolis in Maryland, Westfield Topanga in Los Angeles and Westfield Southcenter in Seattle.

The malls generate average annual sales per square foot of $456 with average occupancy of 93.4%. The portfolio carries roughly $600 million of debt, of which CPPIB will assume a 45% share.

Also on Tuesday, Westfield announced it is selling its stake in three U.K. shopping centers for $240 million and that it will buy back up to 10% of its stock. Westfield is still trying to sell 17 lower-quality malls in the U.S., and Starwood Capital remains a bidder for some of those, according to a person familiar with the matter.

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