No comment on NZ malls
Scentre Group, the new owner of Westfield's Australasian shopping malls, has declined to comment on whether its New Zealand portfolio is on the market.
The A$17.3 billion ($18.7 billion) company, which began limited trading on the ASX last week, was created out of a restructure of Westfield's New Zealand and Australian retail assets.
The company owns nine New Zealand shopping centres, including Riccarton Mall in Christchurch, Queensgate in Wellington, St Lukes in Auckland, and Chartwell in Hamilton.
Debra McGhie, Scentre Group's spokeswoman in New Zealand, said it was company policy not to comment on speculation.
Harbour Asset Management owns shares in Scentre Group and its retail analyst, Craig Stent, said the new structure would be reviewing all its options.
The rumours were that Singapore's sovereign wealth fund, GIC, and Canadian pension fund CPPIB were keen to acquire a stake, he said.
It was also possible that the pension funds would simply buy the underlying assets and leave Scentre with the management.
"Assets like this which don't come along very often are pretty attractive for these guys," Stent said.
"The general economy is OK and Westfield malls tend to be a better quality proposition than perhaps some of the other ones around the place."
The Australian Financial Review's sharemarket publication, Street Talk, said today it believed Scentre was considering selling a half stake in the New Zealand portfolio to pay down debt.
Such a move would value the assets at about NZ$3b, higher than their book value of $2.7b, it said.
"Shedding a stake in the New Zealand portfolio, which accounts for close to 10 per cent of Scentre's asset base, should also generate a higher return on equity and free up cash for the development pipeline," Street Talk reported.
Scentre was created from a controversial merger of Westfield Group's Australian and New Zealand retail interests and Westfield Retail Trust's interests in essentially the same portfolio.
A research report by Morningstar anticipated Scentre Group would "divest part stakes in some assets to fund development opportunities" and lower its gearing levels, as it looked to refresh some of its malls.
The company was a formidable competitor as its larger malls enjoyed long-term leases with anchor tenants, established transport routes and high patronage.
But it also faced "significant challenges" from online shopping, and from tenants who would resist rent rises without a rise in revenue.
Many booksellers and music stores had left the malls for the cheaper online sphere. But other retailers would want to retain some form of physical presence "as we expect there will be ongoing demand by customers to touch, feel and discuss items before purchasing".
Barring a major economic downturn, Morningstar said it expected Scentre's malls would remain an attractive distribution channel for retailers.