Lowy Sons Take Control of Westfield as Father Steps Back
Peter and Steven Lowy today took control of Westfield Group (WDC) as their father Frank stepped back from the company he founded in 1959.
Frank Lowy, 80, assumed the role of non-executive chairman at the annual shareholder meeting of the world’s biggest shopping mall operator by assets today in Sydney, while his second and third sons were named co-chief executive officers.
“That Frank can step back is fantastic,” said Rhett Kessler, a fund manager at Pengana Capital. “It means the company is bigger than the individual person.”
The changes follow Westfield’s creation of a new listed property trust to own half of its Australian and New Zealand malls, which enables the main entity to focus on higher-return activities like development and management. The spinoff, Westfield Retail Trust (WRT), is trading 4.7 percent below its December offer price, while Westfield Group shares have declined 6 percent in 2011.
Sydney-based Westfield Group upgraded its development-starts forecast to between A$1.25 billion ($1.3 billion) and A$1.5 billion for 2012 and 2013 earlier this month, from between A$750,000 and A$1 billion earlier.
Westfield Group shares fell 0.2 percent to A$9.01 at the 4:10 p.m. close of trading in Sydney and Westfield Retail shares declined 1.1 percent to A$2.62, compared with a 1 percent decline in the benchmark S&P/ASX 200 Index.
The Group is considering developing shopping centers in Belgium and Italy as it expands in continental Europe, the U.K.’s Independent newspaper reported on May 22, without saying where it got the information. The Australian company is in talks with Gruppo Percassi about building a shopping center east of Milan, the newspaper said. Its project in Belgium will be named Uplace Machelen, according to the Independent.
“Historically, Westfield’s offshore growth has been in the U.S. and New Zealand, and more recently in the U.K. - all markets that share similar economic and cultural characteristics with Australia,” Frank Lowy said today in his last speech to shareholders as executive chairman. “But there are other markets with stable and mature retail environments which present opportunities for Westfield to apply its expertise and improve the management and increase the value of existing shopping centers in those markets.”
Westfield will “continue to consider each of these opportunities on their merits, and proceed only where we are confident they will create value for shareholders,” he said.
Established areas with few outstanding mortgages that are in need of more retail space, similar to the location of Westfield London, “can be very profitable,” he told reporters after the meeting.
Frank Lowy was executive chairman for 25 years, he said in today’s speech. Peter and Steven Lowy were previously joint managing directors.
Sales, New Markets
“The market is now waiting on news of asset sales in the U.S.,” said Winston Sammut, managing director at Maxim Asset Management. “Their long-term plan is to be truly global and there’s been talk about them expanding into Europe. It may still be a little bit early, but that’s the way forward. In the meantime, they’ve got a couple of things to keep them occupied like their development pipeline and the sale of U.S. assets.”
The company is seeking buyers for $2 billion of U.S. malls and will redeploy the funds into development work, the Wall Street Journal reported in April.
“We announced when we did the restructure that we’d be looking at selling some of our less productive assets,” Peter Lowy told reporters. “Similarly with joint ventures, we’re analyzing which centers, where the market is.”
David Lowy, Frank’s oldest son, and board member David Gonski didn’t seek re-election to the board. Brian Schwartz, a director since May 2009, is set to replace David Lowy as deputy chairman.
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