Europe's biggest mall owner buys Westfield for $25bn
France’s Unibail-Rodamco to become world’s largest shopping centre operator after snapping up Australian company
Europe’s biggest commercial property company is to buy Westfield, the Australian company behind the UK’s two highest-earning shopping centres, in a $25bn (£19bn) deal that will create the world’s largest mall operator.
Unibail-Rodamco of France, which owns Forum des Halles in Paris, plans to roll out Westfield centres in Europe and the US. The Lowy family, Westfield’s biggest shareholder, is selling its 9.5% stake for a mixture of cash and Unibail shares.
The planned tie-up comes as the growing number of people buying items online, fuelled by Amazon, forces shopping centre operators to focus on their best assets.
Jaap Tonckens, Unibail-Rodamco’s chief financial officer, said shopping centres still had a future. “Especially younger people do their research on their phones and then go to malls to get what they want and to hang out with their friends and have a meal ... You are talking about people wanting an experience,” he told Bloomberg.
Many retailers are cutting shop-floor space and focusing their property portfolios on the most popular centres as consumers increasingly have fewer reasons to visit a store.
Marks & Spencer, Debenhams and Toys R Us have announced plans to close stores, while the collapse of BHS last year left shops empty. Rents in premium shopping centres are holding up or rising, while less popular centres and some high streets are struggling.
New or significantly refurbished UK shopping centres accounted for 63% of leasing transactions in the 12 months to June, according to the property advisory company Cushman & Wakefield.
In the US, where the majority of Westfield’s shopping centres are located, there is a bigger shake-out under way. Of about 1,200 across the country, less than half are expected to be in operation five years from now. Years of underinvestment in older centres combined with overexpansion in the face of the online shopping boom is taking its toll.
Forum des Halles in Paris is owned by Unibail-Rodamco, which runs 69 shopping centres in 11 EU countries. Photograph: Frederic Stevens/Getty Images
Unibail’s takeover of Westfield comes after Hammerson, which owns Birmingham’s Bullring shopping centre, agreed to buy Intu, the company behind Manchester’s Trafford centre, in a £3.4bn deal last week that will create Britain’s biggest property company worth £21bn.
Westfield runs shopping centres in White City, west London, and Stratford, east London. It has plans to build a third centre in Croydon, south London. The company’s portfolio of 35 centres includes sites in Italy, the US and Australia. Unibail runs 69 shopping centres in 11 EU countries but lacks a UK or US presence.
Analysts at Morgan Stanley said: “The deal would plug the last remaining holes in Unibail-Rodamco’s European dominant positioning – now also UK and Italy – and give the group access to a high-quality portfolio in the US.”
Charlotte Pearce, an analyst at the retail consultancy GlobalData said the Westfield takeover would enable Unibail to benefit from expected growth of 7.2% in the UK super-mall market over the next five years to £12.3bn.
“With consumers favouring destination shopping locations which appeal to shoppers’ desire for a social and lifestyle experience, and Westfield setting the bar in terms of focus on overall experience, this is a beneficial move,” she said.
Both company boards unanimously recommended the deal. Frank Lowy, the Westfield chairman and co-founder, recently received a knighthood. He and his co-chief executive sons, Steven and Peter, will step down, but Lowy will chair an advisory board for the new company.
The Westfield business empire grew out of a delicatessen and later a shopping centre founded in Sydney in the 1950s by Lowy, now one of Australia’s richest men, and the late John Saunders, both immigrants from Hungary who survived the Holocaust.
Read more here: https://www.theguardian.com/business/2017/dec/12/europes-biggest-property-firm-snaps-up-westfield-lowy-unibail-rodamco