Westfield's Scentre Group set for trading commencement

Westfield's Scentre Group set for trading commencement
Westfield's Scentre Group set for trading commencement

The Westfield Retail vote taken on Friday will allow Westfield Group – which will become known as Westfield Corporation – to cut its ties with Australia and focus on global cities, including New York, London and Milan.

There was a total of 76.09% votes in favour of the restructure, narrowly exceeding the 75% approval requirement.

The Westfield Group and Westfield Retail Trust are likely to begin trading on Wednesday, on a deferred settlement basis, as Westfield Corporation and Scentre Group respectively. 

The proposal remains subject to a number of conditions, including WDC obtaining the necessary orders from the Supreme Court of NSW at the hearing scheduled for 23 June.

Subject to satisfaction of these conditions the last day of trading in WDC securities will be Tuesday 24 June 2014.  Scentre Group securities will commence trading on a deferred basis on Wednesday 25 June 2014. 

From Brazil, the chairman of WDC, Mr Frank Lowy, said he was pleased with the result.

“Achieving a 75% 'yes' vote was a high hurdle but we were always confident of the intrinsic strategic merit and fairness of the proposal to both entities and we now look forward to the creation of what will be two new, great companies,” he said.

The proposal to separate Westfield Group's Australian and NZ business from its international business was announced in December 2013 and was based on the fact that each business now had the necessary size and scope, supported by depth of executive talent, to compete effectively and thrive on their own.

It was also based on the belief that allowing investors the option of two entities, representing different markets, as well as somewhat different investment opportunities and currency options, would unlock significant value and choice for shareholders. 

Frank Lowy, will chair both Westfield Corporation and Scentre Group.

Peter and Steven Lowy will be co-chief executive officers of Westfield Corporation and Westfield group chief financial officer, Peter Allen, will become chief executive officer of Scentre Group. Merrill Lynch has estimated the implied entry price into Scentre and Westfield Corporation at $3.07 a share and $6.41 a share respectively (after incorporating the capital return, first-half 2014 distributions and the conversion ratios of both stocks).

The prior Westfield Group had interests in and operates one of the world's largest shopping centre portfolios with investment interests in 87 shopping centres across Australia, the United States, the United Kingdom and New Zealand, encompassing 20,000 retail outlets and total assets under management of over $68bn.

WRT and the 8% Lowy-owned Westfield Group will both sell their jointly owned 47 Australian and New Zealand shopping centres into the new listed company, Scentre, in return for shares and cash. Westfield will also sell management and development rights on the properties to Scentre, and its shareholders will own more than half of Scentre.

Westfield will rename itself Westfield Corporation, with a portfolio of 44 shopping centres across the United States, Britain and Europe.

The Age columnist Malcolm Maiden noted of the top 10 Australian real estate investment trusts, WRT was the only one that was still externally managed.

While Scentre will own and manage top-flight retail assets, Maiden noted it will have a block of shares on its register that will be classed as an overhang until evidence shows otherwise.

Of the top 10 Australian real estate investment trusts, WRT was the only one that was still externally managed.

"The holders of almost 20% of WRT's securities voted against the restructure, and they will own about 8% of Scentre.

"The Lowy family will also inherit a holding of about 4% in Scentre, and as this restructure shows, its attention is going to be focused overseas."

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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