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October 24, 2010 10:35 pm
The £1.5bn Westfield shopping centre that forms the gateway to the 2012 Olympic Games will be part sold to a new fund backed by some of the world’s largest property investors being set up by Henderson Global Investors.
Westfield, the listed Australian retail developer, is in advanced talks to sell a stake of as much as £750m to Henderson, which is expected to create a fund structure open to a group of major clients.
Westfield Stratford will cost £1.45bn by the time it is completed in the second half of 2011. The London shopping centre will be the second largest in the UK, totalling 1.9m sq ft of retail and leisure and with more than 300 retailers, including anchor stores John Lewis, Marks and Spencer, Waitrose and the Vue cinema chain.
The scheme will also include 1.1m sq ft of offices and two hotels. More than 70 per cent has been let to retailers so far, including most of the anchors and larger format stores, with talks under way to complete the remainder of the lettings before the centre’s planned opening in September next year.
The deal will considerably reduce the risk of development for Westfield, which is almost alone in the UK in building a big retail scheme at present owing to the lack of finance that has stopped work by many rivals.
Westfield itself has halted other UK shopping centre developments, including a site in Bradford city centre, owing to the economic downturn.
It is understood to be looking at restarting work on certain UK schemes, however, potentially with investment partners to share the risk. Westfield said in May that it planned to start up to A$1bn of developments every year across its overseas business having seen retail conditions stabilise in the second half of 2009.
Henderson is thought to be creating a fund around Westfield Stratford for certain large clients. The transaction would be similar to the acquisition of a stake in the Bullring in Birmingham for £210m in 2009, which Henderson bought on behalf of Australia’s Future Fund. It is unlikely to be just a single client for Westfield Stratford, however, as this is a larger transaction. All parties declined to comment.
The Australian retail developer has already opened a mall in west London, which is trading successfully in spite of worries leading up to its opening amid the credit crisis in 2008.
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