It's the baby of Australia's most successful businessman, with a huge development pipeline and rock-solid yield. Now divorced from the lethargic Australian economy it's leveraged to U.S. economic strength and plans to grow by building the world's best shopping centres in major global cities.
The boss's determination to separate Westfield's Australia and New Zealand assets from its international assets caused much controversy in the first half of 2014, but there won't be many shareholders complaining out loud now.
Up around 34% since its creation just over six months ago, Westfield Corp Ltd (ASX: WFD) has been one of the ASX's best performing blue chips in 2014, despite operating for only half of the year. The newly created operator of Westfield's domestic assets, Scentre Group Ltd (ASX: SCG), has also returned around 20% to investors over the last six months.
Growth
Frank Lowy and family were determined to implement Westfield's split in the first half of 2014 and in the process retained most of their dynastic wealth in the group's international assets contained in Westfield Corp Ltd.
For Westfield Corp shareholders (and the Lowy family) the timing of the split could hardly have been better. While Australia's shopping centre market is now heavily saturated, the U.S., U.K. and other major countries offers plenty more growth opportunities and large economies with positive outlooks. In total Westfield Corp currently has around $11.6 billion worth of global projects in development to add to 40 existing shopping centres across the U.S., U.K. and Europe. The founder-led businesses have been phenomenally successful, continue to grow and deliver big total returns to smart investors.
As an example the Westfield recipe of integrating food, fashion, entertainment and leisure with the world's leading brands is set to hit New York's World Trade Centre site in 2015. This iconic development aims to show-off Westfield's place in the vanguard of modern shopping's evolution. The site will be the Lowy family's contribution to the $20 billion regeneration of the World Trade Centre site and the group's flagship business. Simplified and focused with management experience, it's hard to see anything other than a bright future for Westfield Corp.
Valuation
Westfield Corp currently expects to earn around 37.6 US cents per security on funds from operations. This would place it on an FX-adjusted price to funds from operations ratio around 22, when selling for today's closing price of $9.45.
That may seem expensive for a real estate investment trust but with an outlook for a falling Australian dollar and strengthening U.S. economy the business has a couple of tailwinds.
Yield
The business is forecast to pay 24.6 US cents per security this financial year, which places on it on an FX-adjusted yield around 2.91% at current prices. A bit skinny for a real estate investment trust, but likely to grow and offering the kind of reliability and defensive quality to support income needs in retirement or otherwise.
Outlook
If you were in any doubt as to the faith the Lowy family have in the group's outlook it's worth noting Frank Lowy bought nearly 24 million extra shares himself in October 2014 for around $175 million. Given his track record, knowledge of the business and industry it's fair to assume he expects his investment to deliver handsomely.
The key for investors is patience in securing the right price. Any significant pullback from today's price of $9.45 looks an opportunity to buy what I think is possibly the ASX's best business.
