2011 Media Releases

Deutsche Bank (XETRA: DBKGn.DE / NYSE: DB) has initiated coverage of Westfield Retail Trust (ASX: WRT) with a Buy recommendation.
Research analyst Matthew Bertram said, “In our view, Westfield Retail Trust is the highest quality domestic real estate exposure in the Australian Real Estate Investment Trust (A-REIT) market, underpinned by high barriers to entry, income security, strength of development and asset management.” 

Westfield Retail Trust was formed in December 2010 following a restructure of the Westfield Group (WDC) through a pro rata distribution of units on a 1-1 basis to Westfield Group security holders. In addition to the restructure, Westfield Retail Trust also raised a total of AUD2.01 billion of new equity, which repositions it at the low-end of the A-REIT sector in terms of financial leverage.

Bertram said, “Westfield Retail Trust is geared at 21.5%, compared to the current A-REIT sector average of 32.3%. Combined with a payout ratio of 90%, it has the balance sheet capacity to fund current and identified developments.”

As a 50% joint venture partner with Westfield Group, Westfield Retail Trust has interests in 54 shopping centres with a combined gross asset value of AUD12.2 billion. Deutsche Bank estimates that 83% of Westfield Retail Trust’s portfolio (by value) is comprised of Australian regional malls. “Given regional malls have high barriers to entry, diversification and long-duration income streams, we expect Westfield Retail Trust to have low beta,” Bertram said.

Deutsche Bank sees the formation of Westfield Retail Trust as a positive for diversification and portfolio construction as it adds a liquid and specialised REIT to the listed market. Possible downside risks identified include higher interest rate charges which could impact earnings per share (EPS) growth and consumer spending as well as internet retailing as a wider threat to shopping centres.

For further information, please contact:

Deutsche Bank AG    
Name : Amy King   
Phone: +61 (0) 2 8258 2505
E-Mail: amy.king@db.com