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Australia's king of retail malls, Frank Lowy, sells Westfield shopping centres

13 December, 2017, 06:07 | Author: Melinda Barton
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Westfield Corp., operator of upscale shopping malls in Los Angeles and dozens of other locations in the USA and Britain, is being sold to French commercial real estate giant Unibail-Rodamco in a $16-billion deal, the two companies announced Tuesday.

Westfield shareholders will receive a combination of cash and stocks in the combined entity.

The Lowy family, which owns 9.0 percent of Westfield, said they would rather be investors than executives after putting in a combined 145 years at the company, which has stakes in 18 suburban USA shopping centers, three of which it wholly owns.

Unibail was helped by very cheap European debt in the 2.0-2.5 percent range and synergies that will result in about $100 million in cost savings, said Scott Crowe, chief investment strategist at real estate focused CenterSquare Investment Management in Philadelphia.

"The acquisition of Westfield is a natural extension of Unibail-Rodamco's strategy of concentration, differentiation and innovation". "It adds a number of new attractive retail markets in London and the wealthiest catchment areas in the United States".

Westfield has been viewed as a pioneer in US mall redevelopment, focusing on luxury properties rather than lower-end malls located in less affluent locations where hundreds of stores have been shuttered.


"This is really the polarization of shopping mall markets".

Westfield started out with one shopping centre in Sydney's suburbs and now has interests in dozens of shopping malls and airport retail spaces in the United States, Britain and Europe. Westfield's portfolio is valued at $32 billion.

Chairman Sir Frank Lowy, who was knighted just this week by Queen Elizabeth II says the move was part of its journey, and had been on the cards since its 2014 restructure. It expanded to New Zealand and the United Kingdom and entered the USA market in 1977. The restructure had initially drawn criticism from shareholders, but proved to be a wise move for Westfield to focus on mall operation in the US and Europe.

"We believe that this transaction represents a compelling opportunity for both companies to realise benefits not available to each company on a standalone basis, and creates a strong and attractive platform for future growth".

Not yet. Unibail-Rodamco's value fell as much as 4.1% on news of the deal.

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