WESTFIELD DEVELOPMENT OR DESTRUCTION

I have long been a fan of this group, but I think its size is finally going to hurt this behemoth. If this company was just trying to collect the rentals of its vast, superior shopping centres I would be relatively happy. But in order to grow at a superior rate in line with its history it has embarked on an enormous development pipeline.

After 40 years of growing this company I believe the bet on being able to let the new developments coming on stream in the next 3 – 5 years could see the destruction of a large chunk of this company. I give the chances of a global recession into the period in which these developments come on stream around 60%.

Westfield to Raise 530 Million Pounds With U.K. Fund (Bloomberg)

2007-07-02 02:34 (New York) By Garfield Reynolds and Kathleen Chu July 2 (Bloomberg) -- Westfield Group, the world's biggest shopping center owner by market value, plans to raise 530 million pounds ($1.06 billion) by selling stakes in four U.K. malls, giving it cash to build new projects that offer higher returns. The sale means Westfield has raised more than A$7 billion ($6 billion) this year, according to a statement today from the Sydney-based company. Two investors agreed to buy 67 percent of a fund that will buy the stakes and Westfield will market the remainder to a wider group of potential buyers. Westfield is seeking to tap economic growth in spending A$5.4 billion on the construction of 19 malls and plans to start building additional properties at a cost of more than A$9 billion over three years. New malls can deliver greater returns than existing ones. ``This is part of a very smart funding program where they sell more mature assets at high prices and reinvest the money into the development pipeline,'' said Simon Garing, an analyst at UBS AG in Sydney. ``For every $2 billion they spend on development, they make $1 billion of profit.'' Westfield shares advanced 4 cents to A$20 in Sydney, valuing the company at A$35.5 billion. The new fund, Westfield U.K. Shopping Centre Fund, will have stakes in properties worth about 2.1 billion pounds, including Merry Hill, which is worth 1.05 billion pounds.