Frank Lowy's Olympic sprint

In a marketing coup for Lowy a remarkable 70 per cent of all attendees at the Olympics are expected to move through Westfield's new ‘Stratford' centre as they make their way to the games stadium next door.

But it's more than a marketing story… analysts point out that the numbers for the Stratford shopping centre, located in downmarket east London, are exceptional. "With an internal rate of return of up to 19 per cent, it's showing the wider world they can do successful developments even in the hardest market," Stephen Rich at Credit Suisse says. (Typical IRRs for shopping centres are closer to 13 per cent.)

Westfield has already booked a $150 million profit from the development, selling a half share to Dutch and Canadian pension funds. Moreover, industry estimates suggest the centre will take in roughly 1 billion pounds sterling a year, long after the Olympics are finished.

For non-executive chairman Frank and his two sons Peter and Stephen – who are co-chief executives since last May – this strategic win will be particularly welcome. Westfield has been struggling on the stockmarket in recent times. Indeed our biggest property company endured a run of ‘sell' notes in recent months as everything from poor retail spending to a high Australian dollar pinched the group's bottom line.

Not that Westfield will vault its many challenges with success at one centre; serious questions remain about the earning capacity of shopping centres in a low growth global economy. Forecasts for net profits at the $22 billion group for the next two years are flat and Westfield stock, now at $9.40, might well be up 20 per cent since Christmas but it was trading at more than $12 this time last year.

The market now expects Westfield – cashed up after recent US asset sales – to exploit the success of Stratford and move to dominate the UK shopping centre sector in the same fashion it dominates Australia.

Earlier this week John Kim, an analyst at brokers CLSA, suggested Westfield could now make a play for Hammerson, Britain's third-largest shopping centre group. "There is a compelling case for Westfield to consider Hammerson... the UK company trades on a 21 per cent discount to its net asset value,” Kim said in a note released May 9.

At its best the Stratford story also argues against a deeper fear among some investors that shopping centres as a retail format may have peaked – the Stratford centre has 270 shops, but it is as much an entertainment centre with 70 food outlets, two hotels and Britain's biggest casino, Aspers.

The last time an Australian company took responsibility for an iconic UK project was the Multiplex Wembley Stadium development in 2006, but the venture was a disaster with delays and court cases that dominated financial media for months. Six years later Westfield is successfully opening Europe's largest shopping centre in the middle of a UK recession... give that man a medal.