By Robb M. Stewart and Ross Kelly
Westfield Group (WDC.AU) will shell out US$800 million for full
control of the retail wing of the new World Trade Center
development, bolstering the Australian company's shopping mall
empire ahead of its planned carve-up into international and
domestic businesses.
The Port Authority of New York and New Jersey will sell its 50%
stake in the Lower Manhattan retail site to the Sydney-based
company, the two companies said separately. The purchase will take
Westfield's investment in the project to more than US$1.4 billion,
which it said will allow it to reduce development risk.
The agreement comes on the heels of a move by Westfield to merge
its Australian and New Zealand malls with Westfield Retail Trust
(WRT.AU), which it spun off in 2010, to form a new company that
will be called Scentre Group. That will leave a renamed Westfield
Corp. to focus on shopping centers in Europe and the U.S.,
including New York's World Trade Center and the expansion of the
Century City mall in Los Angeles.
Westfield bought a 99-year lease in the World Trade Center's
retail facilities in mid-2001 and then entered a joint venture to
own and operate the space with the Port Authority in 2012, with
Westfield in charge of management and leasing. The premises cover
about 365,000 square feet on several levels, including street-level
real estate on Church St., Cortland Way and Dey St. and three
floors in Towers 3 and 4.
The initial phase of the retail complex is expected to open in
2015 and Westfield said its deal with the Port Authority includes
an additional one-time payment within five years of the opening
date if returns exceed certain thresholds.
"Since 2001, Westfield has believed in and remained committed to
investing in this site and in this city. We take great pride and
pleasure in amplifying that commitment," Peter Lowy, co-chief
executive of Westfield, said.
The Port Authority said it will retain ownership of the World
Trade Center transportation hub, an integrated network of
underground pedestrian walkways connecting commuters and visitors
to subway lines and the redeveloped Fulton Street Transit Center.
Authority Chairman David Samson said the sale to Westfield will
allow his company to focus on transportation.
Westfield, which began with a single shopping center in a suburb
of Sydney in 1959 and now owns malls around the world, Wednesday
said it would sell its 50% interest in its Australian and New
Zealand businesses to Westfield Retail Trust, which already owns
the other 50%. The new Scentre Group and Westfield will be listed
with separate boards and management teams, although Westfield
co-founder and Chairman Frank Lowy will be chairman of both.
Shares in Westfield, which climbed almost 4.1% Wednesday, were
about 0.9% lower midday Thursday; Westfield Retail Trust was down
1.5% in an overall broadly negative Australian market.
Write to Robb M. Stewart at robb.stewart@wsj.com and Ross Kelly
at ross.kelly@wsj.com
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