Westfield Retail Drops Most in 17 Months as Lowys Sell Stake

Westfield Retail Trust, Australia’s second-biggest property trust, slumped by the most in more than 17 months after the family of Westfield Group founder Frank Lowy sold its stake at a discount yesterday.

The stock plunged 4.1 percent to A$3.05 at the close of trading in Sydney, the biggest drop since Sept. 22, 2011. The Lowy Family Group sold A$663.7 million ($678 million) worth of shares at A$3.09 each after the close of trade yesterday.

“The decision of a long-term and wise investor to reduce its exposure to Australian shopping centers raises questions about the future direction of capital values,” Richard Jones, a Sydney-based real estate analyst at JPMorgan Chase & Co., wrote in a note yesterday downgrading the stock to neutral from overweight. “The Lowy exit clears the path for Westfield Group to sell down an additional 25 percent in assets it owns 50:50 with Westfield Retail,” and raise about A$4.3 billion, he said.

Westfield Retail was spun off from Westfield Group in December 2010 to own stakes in the mall operator’s Australian and New Zealand properties, freeing up the bigger company to pursue developments overseas. LFG held the second-biggest stake in the A$9.3 billion retail trust in the name of Lowy’s son and Westfield Group co-Chief Executive Officer Steven Lowy, according to data compiled by Bloomberg.

The Lowy Family Group is run by Lowy’s oldest son David and manages the family’s investments. UBS AG was managing the share sale, according to a sale document seen by Bloomberg News.

Profit Decline

Westfield Retail this week reported a 2.2 percent decline in net income in the year ended Dec. 31. Westfield Group said rents on new specialty store leases at its Australian and New Zealand malls held jointly with the retail trust were 2.5 percent lower than expiring leases.

“As the largest shareholder in the Westfield Group, the Lowy family’s interest and continuing commitment remains unchanged,” LFG said in a regulatory filing yesterday. “Through Westfield Group, LFG retains a significant investment in Westfield’s superior shopping center portfolio in Australia and New Zealand.”

Westfield Group shares fell 0.9 percent to A$11.10, compared with the S&P/ASX 200 Index’s 0.4 percent drop.

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