Bloomberg News

Westfield Group Discusses Partnership With Owners of U.K. Shopping Center

March 05, 2012

Westfield Group (WDC) is in talks to become a partner in a south London shopping mall with co-owners who may default on a loan for the property after the main office tenant moved out.

Irish Bank Resolution Corp.’s (ANGL) private clients, who bought a 50 percent stake in the Whitgift Centre in 2005, may miss repayments on a 171 million-pound ($227 million) loan used to make the purchase, the Dublin-based bank said in a report to investors obtained by Bloomberg News. Westfield may redevelop the site in the borough of Croydon, though IBRC’s clients are also discussing a partnership with other companies, the bank said in the report, without identifying them.

IBRC, formerly Anglo Irish Bank Corp., declined to comment in an e-mail. Separately, Westfield is working with the Whitgift Foundation, owner of the land on which the mall is built, on a plan for the site, the Sydney-based retailer said in a Nov. 10 statement.

The shopping center has 167 shops and 410,000 square feet (38,100 square meters) of offices. About 80 percent of the office space at Whitgift was empty at the end of 2011 after the Home Office, the U.K. agency responsible for immigration and crime, vacated a building there.

Less Rental Income

Rental income “has fallen to a level where our ability to service our interest is challenged,” the bank said in the report. “Should we fail to meet interest servicing commitment, the facility will be in default.”

IBRC’s clients bought the stake in the Whitgift mall for 225 million pounds by using 66 million pounds of equity provided by them and a non-recourse loan, according to the report.

The property was valued at about 143 million pounds in October by DTZ Debenham Tie Leung Ltd, 36.5 percent less than the purchase price, IBRC said in the report. That means investors have lost all their equity, the bank said.

A spokesman for Royal London Asset Management, which holds part of the mall’s leasehold, confirmed that Westfield is among the potential investors holding talks on the redevelopment. He declined to be identified. The company, based in the U.K. capital, isn’t affected by IBRC’s loan payments.

Hammerson Plc (HMSO), which bought the Centrale mall in Croydon a year ago, is also interested in becoming a partner on the Whitgift site, Lawrence Hutchings, head of the company’s U.K. retail unit, said in a call with analysts Feb. 24. Hutchings said he hopes that talks about a partnership are concluded “very quickly and naturally we’re hoping that we’re the successful candidate.”

Westfield didn’t respond to a request for comment.

The Irish government took over Anglo Irish Bank Corp. in January 2009, according to its website. Irish Nationwide Building Society’s operations were transferred to the bank in July 2011 and the lender was renamed IBRC in September.

To contact the reporter on this story: Neil Callanan in London at ncallanan@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.


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