Westfield's Huge Restructure Looks Like It's Going Ahead

Frank Lowy (Photo: Getty/Brendon Thorne)

Westfield Retail Trust shareholders voted in favor of a plan by its manager and Australia’s biggest shopping mall operator, Westfield Group, to merge their local operations into a new company.

About 76 percent of votes cast were in favor of the creation of Scentre Group, which would hold Australian and New Zealand operations of Westfield Retail and Westfield Group, the trust’s chairman, Richard Warburton, said at a shareholder meeting today. Support from at least 75 percent of shareholders was needed for the restructure to proceed.

Frank Lowy, the billionaire founder of Westfield Group, faced opposition to the reorganization, with some Westfield Retail shareholders saying they would be paying too much to take over management of the local business and it would have too much debt. The board of Westfield Retail had deferred a vote on the proposal on May 30 after the 83-year-old said he would press ahead with separating Westfield’s global and local businesses with or without the support of the retail trust.

“It now remains to be seen whether the 24 percent that opposed the move follow through and perhaps look to reduce their exposure or sell out altogether” of the retail trust, Winston Sammut, who helps oversee about A$100 million, including Westfield Retail shares, as managing director of Sydney-based Maxim Asset Management, said by phone. “That’s going to be the determinant for the stock going forward.”

Shares in Westfield Retail and Westfield Group were halted from trading today ahead of the meeting.

Investor Choice

Scentre will have A$37.9 billion ($35.6 billion) of domestic assets under management while the other new company, Westfield Corp., would manage $26.6 billion of global investments. The reorganization creates a clear choice for investors wanting exposure only to Australian and New Zealand malls while allowing Westfield Corp. to expand in faster-growing retail markets including the U.S. and U.K.

A 15 percentage-point rise in Scentre’s debt to 37.3 percent of assets compared with the retail trust in its current form, and the high cost to Westfield Retail shareholders for Scentre’s management rights were among the major objections, according to a March 31 report by CLSA Asia-Pacific Markets.

Following the count of proxy votes and those cast at the meeting, 76.09 percent were in favor of the proposal while 23.09 percent were against, Westfield Retail said.

Lowy, Australia’s fourth-richest individual with a net worth of $5.4 billion, according to the Bloomberg Billionaires Index, will be chairman of both Westfield Corp. and Scentre.

Shares in Scentre and Westfield Corp. would begin trading on deferred settlement basis June 25, Westfield Group said in a regulatory filing on June 5

©2014 Bloomberg News

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