WDC - Westfield Group

[drsmith]

Yes, Thats right Pointless speculation in response to pointless speculation,

I am saying the fact that this is happening in the sector will not have any affect on westfield's viability in the shorterm or longterm,

Where have I questioned the viability of Westfield ?

I can't comment on other members of the sector because I know nothing about them, except I do know stocklands assets and balance sheet don't match WDC in terms of qualty, so it may be a problem for them if they are already over leveraged and have weaker properties with weaker tenants.

The original article was talking about stockland not WDC.

There is a reference to Westfield in the article. As you have now read it you would be aware of that.

 

[Tysonboss1]

There is a reference to Westfield in the article. As you have now read it you would be aware of that.

It's means nothing, It's just a media beat up for a story. Even the stockland guy says the amounts they have loaned are immaterial amounts, and then he just throws WDC's name out there in a throw any comment.

 

[drsmith]

It's means nothing, It's just a media beat up for a story. Even the stockland guy says the amounts they have loaned are immaterial amounts, and then he just throws WDC's name out there in a throw any comment.

The fact it is being done is material. As to whether Quinn's comment about WDC is throw away you can't be sure of that. The retail environment environment in the USA is currently far tougher than that of Australia.

Where have I questioned the viability of Westfield ?

 

[Julia]

Thats a big potential 'IF' the small business fails. I'm sure westfield, or stockland, or whomever the larger company is, they do their due dilegence on the company beforehand to make sure they will be profitable enough to not only pay their rent but also pay their loan owing to their larger company.

Yes if the small business defaults then the large company takes on the debt and risk and loses their money. But it also can provide the returns on any idle cash they may have had as well.

Its basically an investment that westfield or scotland are making in the small business to make sure that their core business of having their land rented continues to occur as well. This may have been a major issue 6-12 months ago when unemployment was on the major rise and consumers were spending less at the stores. But as unemployment is now reasonably steady / on the improve the only main thing that I can see hurting the small business within the malls is when the stimulus is wound back. However even in aus to the individual it has been wound back, its only the infrastructure stimulus that is really left to be implemented.

So in essence, yes it is more risk for the property companies, but i'm sure it is calculated risks that they would only take on if they are comfortable and see it as a positive for shareholders. All companies are going to have risk, you just have to be comfortable that management understand the risk they are taking on, which I would be confident Westfield would handle any loans dilligently.

Reasonable comments.

It wouldn't be much of a forum if we all agreed on everything.

Agree. That's the point of a forum. Any discussion which forces us to consider our decisions in light of a different view is not wasted.

 

[Tysonboss1]

The fact it is being done is material. As to whether Quinn's comment about WDC is throw away you can't be sure of that. The retail environment environment in the USA is currently far tougher than that of Australia.

Where have I questioned the viability of Westfield ?

In the last 6 moths tenancies have increased in the WDC USA assets, and on an upward trend, and the US properites are still very profiable for WDC.

I didn't say that you questioned the viability of WDC, other than hinting there is risk associated because of the factors we have been discussing. My comment was just saying that I don't believe any associated risk is of a scale that would have a large enough impact as to have a noticable affect on profitabilty or the viabilty of the company or my investment decision.

 

[drsmith]

I didn't say that you questioned the viability of WDC, other than hinting there is risk associated because of the factors we have been discussing. My comment was just saying that I don't believe any associated risk is of a scale that would have a large enough impact as to have a noticable affect on profitabilty or the viabilty of the company or my investment decision.

How you wish to assess the risk is up to you but that does not jusitfy unrelated comments such as this.

In fact you and dr smith both made negative comments ( on different threads) in regards to my investment in Beppa. Luckily I didn't listen to you both because within weeks my 300,000 shares went from 8c to 37c.

You only make a fool out of yourself with that sort of commentary.

 

[So_Cynical]

It does increase overall sector risk and that is something any potential investor needs to be aware of.

Its a nothing really...landlords 'helping' there tenants pay the rent or 'helping' to make there bussinesses more profitable is never going to impact negitively on the landlords, the property industry just dosent work that way.

 

[Tysonboss1]

You only make a fool out of yourself with that sort of commentary.

Not really, Had things gone differently I don't think the band wagon of nay sayers would have missed their opportunity to say "I told you so".

 

[gooner]

I don't intend to buy into the bigger "discussion" that seems to be going on here but on the subject of risk to WDC in supporting/lending to its tenants, yes, it is a risk but it's a business risk which WDC management is well qualified to assess and assume if appropriate.

As has been stated, risks are present with all businesses. It's the ability to assess and manage those risks that sorts out the successful companies from the unsuccessful.

Or is that too obvious?

Not sure that WDC is well qualified - it is in the retail space leasing business not lending business. Personally, I hope that they are not extending too much credit to tenants.

I hold

 

[oldblue]

Not sure that WDC is well qualified - it is in the retail space leasing business not lending business. Personally, I hope that they are not extending too much credit to tenants.

I hold

I consider them qualified in the sense that they know "retailing", probably better than anyone else given their history and scale of operation, eg they'
re in a strong position to assess the likelihood of success in a particular sector in a particular location. I would also think they are able to recruit experienced credit/lending staff.

It's been mentioned before that assisting tenants in various ways is nothing new. The extent to which this goes is important of course but I would back WDC to handle this as well as, or better, than any other landlord.

 

[kermit345]

I would say this information of lending to tennants is material, but not so much that it should sway a investment decision (in my view). While it may be slightly more risk (and Tyson has highlighted the IF's involved with whom they may be lending) this could also provide slightly more reward, as #1 its a tennant they may not have had providing a rental income, and #2 i'm sure WDC or any other property investor does not simply lend them the money for free. So the loan interest is another form of return for the risk involved.

You have to remember these loans would have been made during and after the bulk of the GFC, not beforehand. Thus you'd think they would be less likely to default as businesses should have been performing better since the trough of the GFC.

Just my personal view, I think the article has merit, just isn't a major factor that would influence any view I have on WDC as a whole.

 

[nulla nulla]

Over the past 4 - 5 years, I have spoken with some tenants of Westfield Australian malls and some of them suggested that Westfields may be more flexible in it's dealings with its larger chain customers than it is with the smaller franchise outlets. Their argument being the bigger anchor clients bring in the passing custom for the smaller franchise outlets. Rightly or wrongly it was suggested that Westfields was fairly incistant on being paid rent as and when it was due without argument or concession for hardship experienced by the smaller outlets in any economic downturn. The reality is, there are plenty of hopefulls lining up to open new shops whenever a vacancy arises. Occupancy, particularly in Australia is high. Notwithstanding the share price continues to suffer from the uncertaincy of occupancy and income from the US and European outlets. The dividend for this year will fall and the share price has been savaged since it went exdiv. Where to from here?

 

[ROE]

don't expect too much capital appreciation from these old big bluechip
they are the stories of the past.

Get these for steady and reasonable dividend pay out and lock it in the draw some where... I got them but I didn't buy until it's 10ish mark and
I'm not into for huge capital gain.

You want fast capital appreciation, and decent annual compound dividend grow prepare to spend time and search for quality hidden small gems that no one look or research...

not many but there are a dozen or so around... look hard and you find them
some of them I accumulate in the last 2 years are CCV and FGE
I got one more underway accumulating but I ain't done and I don't want competition.

 

[nawshus]

WDC had a good run today, my newb prediction says it will pass $13 by next week. I've been holding WDC since april last year, and it's been working out so far.

 

[Julia]

WDC had a good run today, my newb prediction says it will pass $13 by next week. I've been holding WDC since april last year, and it's been working out so far.

Can you explain your definition of "working out"?
It's less than $3 more now than it was in April last year.

 

[So_Cynical]

Can you explain your definition of "working out"?
It's less than $3 more now than it was in April last year.

Maybe he's got a million bucks in it...and is happy to get a 160K + return on it over 12 months. :dunno:

 

[drsmith]

Westfield did not get slaughtered as much as other property groups on the way down so consequently it has not recovered as much. It also retains significant exposure to the US and UK economies which are not as robust as ours.

Being a large, mature enterprise its strong growth days are well behind it. If one believes in the sector and management remains sound then it's one that can achieve a mixture of solid if not spectacular long term growth and income.

 

[nawshus]

Can you explain your definition of "working out"?
It's less than $3 more now than it was in April last year.

I'm happy with the $3 capital gain for now, so it's working out for me. I think WDC is undervalued and it's sp still has a lot of potential.

 

[drsmith]

Top down the growth in retail sales in the western economies in which Westfield operates has been financed a lot by increased consumer debt.

Unless they expand into emerging economies (China and India for example), their growth will be limited. The Lowy's have up to this point been cautious with their expansion into new markets and this to some extent saved Westfield from the slaughter of other listed property unit prices during the GFC.

Their real long term capital growth rate is therefore likely to be limited at best.

 

[Julia]

Top down the growth in retail sales in the western economies in which Westfield operates has been financed a lot by increased consumer debt.

Unless they expand into emerging economies (China and India for example), their growth will be limited. The Lowy's have up to this point been cautious with their expansion into new markets and this to some extent saved Westfield from the slaughter of other listed property unit prices during the GFC.

Their real long term capital growth rate is therefore likely to be limited at best.

Agree. Plenty of much more profitable stocks than WDC.
But for some unfathomable reason it - along with QBE - always seems to get included in basic portfolios.