As Westfield currently owns the sites of its shopping centres. This results in high demand for its space and can effect their interest rate and lower their risk. They are able to lower this risk further through residential development. The low interest rate environment currently yields value-accretive options. For these reasons. Westfield may be considered valued. The company’s interest rate, however, is left open to other insalubrious matters such as competition with online business that can threaten their sales growth which in turn threatens their assets if their interest doesn’t neutralize.
Westfield has tried to curtail their interest rate risk by diversifying their portfolio. They’ve done this most recently with starting their tech side with Westfield Labs set up in San Francisco. As the international decline of shopping centers and malls comes to fruition, Westfield is trying to come up with innovative ways to increase their cash flow. They are doing this by reinventing the malls, and this process begins with Westfield Labs.
Westfield labs not only helps to diversify the company’s portfolio but ensures to investors, through a series of rehabilitation to malls, planning, and innovative digital inclusion, that the long-term effects of shopping mall decline does not have to make Westfielf a relic through their interest rate risk. Although the company owns its property outright, it must still contend with borrowed money and interest rate. Westfield has a high-risk total return on its stock which makes it appealing to investors like Schwab and what drive down its interest rate risk. Furthermore the way in which the company is managed, its strategic plans, as well as its current financial structure (diversified portfolio) it has a positive evaluation for its future. These reasons make it a smart investment choice and the reason why its current heavy stock options are warranted (the company’s current yield is above 5%).
The long-term risks of this company seem slim as the company has wisely invested in REIT, and its land ownership in several different countries, in high retail market value property, offers investors a slight ease in their pocketbooks. Overall, the company owns 30 million square feet of shopping mall space in places such as London, Scotland, Australia, United States and soon Milan. Westfield’s electing REIT allows the company to minimize their income tax liabilities which in turn allows them to distribute their income as dividends to shareholders.
The company’s speculative future may be dependent on how well they manage mainland China investments/property, and how well they maneuver the perils of speculative investments as well as overbuilding in what some consider local market dynamics. The company is favored because it invests nearly 80% of its net assets in securities and real estate (both domestic and international).