Westfield (WDC)

By Jason Fittler

Property is the choice of many investors, it seems the debate over which is best will rage on forever as most investors miss the point.

Right now we see that property is in a recession with prices falling, but is this truly the case? The fact is that when you think of property most investors think of residential property or small commercial buildings.

Not many look at property trusts such as Westfield.

Westfield shares bottomed at $7 in March at the bottom of the GFC, most listed property companies did as they carry a lot of debt and investors were not sure if the banks were going to renew their debt facilities.

Westfield was caught up in the rush to dump these investments, but what you brought at this price was a low geared company which had a long-term track record of running a quality business.

The company owned many strategic assets which regardless of a recession and fall in occupancy rates would still provide a decent return on capital.

Since these lows we have seen Westfield move as high as $11 back down to $8 and back to where it is currently trading at $9.24. It has also paid $2.59 in dividends giving it a return of around 21% per annum since the March 2009 bottom.

At present at the current price of $9.25 you are receiving a yield of 5.4% plus expected capital growth given that our price target is $9.45.

When compared to residential property where the prices are expected to continue to drop and a net yield of 3% is considered high listed property companies look like a much better investment.

If property is your choice then you should take a slightly out of the box view on property and look at the listed property companies.

For more information on Westfield (WDC) please contact us on 07 4771 4577.