In what appears to be one of the largest retail investment sales transactions year-to-date, Australian mall operator Westfield announced a joint venture agreement with Canada Pension Plan Investment Board (CPPIB) for an ownership stake in 10 of Westfield’s U.S.-based regional malls and two development sites. CPPIB will pay $1.8 billion in equity, in addition to assuming property-level debt, in exchange for a 45 percent share in the centers.
Westfield will continue to serve as the property manager, leasing agent and developer for the assets. The transaction should close in the first quarter of 2012.
Nine of the centers involved are located in California, including the 1.6-million-sq.-ft. Westfield Topanga in Canoga Park and the 1.5-million-sq.-ft. Westfield Mission Valley in San Diego. In addition, the venture will include 1.6-million-sq.-ft. Westfield Southcenter in Tukwila, Wash. and 1.4-million-sq.-ft. Westfield Annapolis in Annapolis, Md. Overall, the portfolio totals more than 13.5 million sq. ft. of retail space. The malls produce on average $456 per sq. ft. in sales.
Westfield values the portfolio at $4.8 billion, a 3 percent increase over prior book value.
“This is an excellent opportunity to acquire a significant interest in a portfolio comprising high quality regional shopping centers that are well positioned for long-term growth,” said CPPIB Senior Vice President of Real Estate Investments Graeme Eadie in a statement. “This acquisition represents our largest real estate investment to date globally and supports our retail real estate strategy of investing in dominant regional malls with best in class operators.”
When the transaction is completed, CPPIB will own 26 U.S. malls, most of them in major urban markets. As of Dec. 31, its overall real estate investments totaled $14.4 billion.