Westfield fights for control over Karrinyup

The group must gain approval from the ACCC to increase exposure to wealthy northern suburbs of Perth.

Ryan Newman (TMFNewmy)

Ryan Newman (CFA) is the Director of Research of The Motley Fool Australia, and Portfolio Manager for the Pro and North Star services. Ryan’s interest in investing and stocks began at a young. His journey with The Motley Fool started first as a member but when the company first came to Australia he joined the team as one of our writers. Recognising his investing talent and passion, it wasn’t long before he was approached to join the investing team as a research analyst on Pro. Ryan is passionate about learning and continual development. He earned his Chartered Financial Analyst (CFA) designation in 2022, and has completed his Bachelor of Accounting and his Graduate Certificate of Corporate Finance. Ryan loves spending time with his young family as well as non-fiction reading, catching the latest movies and following his sports team, the St Kilda Saints (AFL).

Published August 9, 2013 10:41 am AEST

Westfield Group (ASX: WDC) and its affiliate Westfield Retail Trust (ASX: WRT) are reportedly going up against the Australian Consumer and Competition Commission (ACCC) in order to take control of Karrinyup Shopping Centre, located in Perth.

The mall is valued at $620 million with a gross lettable area of 60,000 square metres and recorded $428.9 million in annual sales last year, according to The Australian. Taking control of the property would boost Westfield's exposure to Perth's northern suburbs.

Whilst WestArt – which is owned equally by Westfield Group and Westfield Retail Trust – currently controls one third of the centre, it is looking to take control of the other two thirds from superannuation fund UniSuper.

However, there are already two other local shopping centres under Westfield's control – namely, Innaloo Shopping Centre and Westfield Whitford City (which is co-owned by GIC Real Estate) – which has prompted concern amongst retailers that Westfield's market power in the local area could become too great should the ACCC allow it to operate a third centre.

Reportedly, Myer (ASX: MYR) is not objecting to the move but a number of smaller businesses, as well as competitor David Jones (ASX: DJS), are considering their positions.

The most likely solution to the problem at hand is that Westfield could be granted the right to take full control of Karrinyup on the condition that it sold its Innaloo asset, which Charter Hall Group could purchase for around $268 million. Meanwhile, another option put forward has been that UniSuper could decrease their stake in Karrinyup and take up a stake in Innaloo.

Foolish takeaway

Westfield's exposure to the wealthy northern suburbs of Perth will be increased should the group land the right to increase its stake in Karrinyup. Whilst the company has maintained a heavy focus on strengthening its property portfolio since the global financial crisis – by divesting in poorer performing assets and expanding its more profitable stores – this move should be seen as a good sign for investors.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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