Australia's Westfield Plans Residential Projects in London, New York -- Update
26 August 2015 - 7:00PM
Dow Jones News
By Rebecca Thurlow
Westfield Corp. (WFD.AU) is considering residential developments
from London to New York as it looks to supplement income from its
growing empire of shopping malls by taking advantage of rising
demand for rental apartments in the U.K and the U.S.
The group is revisiting a strategy used by founder and chairman
Frank Lowy in the 1960s, when he built housing estates in Sydney's
sleepy western suburbs as well as the lucrative shopping centers
that would later become the company's sole business.
After receiving approval to build 2,500 apartments at two London
malls, Westfield said it is also considering similar residential
developments at some of its other shopping centers in the U.K. and
the U.S.
"This examination is going on right now," said Westfield's joint
chief executive Steven Lowy, Frank's son, in an interview. "Many of
our malls have additional land and much of that land is in great
markets that have the ability for this to occur. So we are
certainly gearing up faster in the U.K. but we can certainly share
that the potential is equal or greater in the U.S."
Earlier Wednesday, Westfield reported a 4.2% rise in first-half
operating income as an improving economy in the U.S. helped attract
shoppers to its malls there, boosting sales and allowing it to
increase shop rents.
Westfield said it plans to spend US$2.5 billion on mall
developments in the U.K. and U.S. this year after spinning off its
Australian and New Zealand malls into a separate company called
Scentre Group just over a year ago.
The company exited its older, Australian assets to concentrate
on glitzy new developments such as the new World Trade Center mall
in New York that promise higher returns for investors.
As well as an existing portfolio of 40 mainly U.S. malls, it has
an US$11.4 billion pipeline of current and future developments,
with projects under construction including the Village of Topanga
in Los Angeles, and an expansion at Valley Fair in Silicon
Valley.
Earlier in 2015, it began work on its Century City mall in Los
Angeles and UTC in San Diego, with the expansion at Westfield
London expected to begin later this year.
Westfield hasn't yet revealed whether it will bring in a
joint-venture partner to help fund the apartments at its Westfield
London development and its existing Stratford City mall. Mr. Lowy
said the company is working on how to extract long-term value for
shareholders from the units.
"We haven't decided how we will do it. We are in the process of
examining it very thoroughly," he said.
Mr. Lowy said the company is looking to take advantage of a
"very serious under-supply" of apartments in London as the areas
around the two malls experience "massive regeneration." Stratford
has benefited from development associated with the 2012 Olympics
for which it was a major transport hub.
Demand for rental apartments is rising in the U.K. where, like
in the U.S., homeownership rates are falling as housing
affordability shrinks. U.K. homeownership peaked at 69% in 2001 and
has fallen ever since, according to a July report from the British
Property Federation and U.K. law firm Addleshaw Goddard LLP.
"London is particularly strong, stronger than any other market
in the U.K., probably stronger than any other market in Europe, and
our focus in the U.S., being California, the Washington area, New
York, New Jersey area, Seattle, these are particularly strong
markets in the U.S. that we are investing," said Mr. Lowy.
Recent data shows the U.S. housing market is firming as consumer
confidence there grows after nearly five years of steady job
creation. New-home sales picked up the pace in July, rising 21%
from a year earlier.
Write to Rebecca Thurlow at rebecca.thurlow@wsj.com
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(END) Dow Jones Newswires
August 26, 2015 04:45 ET (08:45 GMT)
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