Westfield buys control of World Trade Centre
Westfield is to spend $US800 million ($883 million) to buy out the remaining half-share of the retail premises at the rebuilt World Trade Centre in New York.
The deal came as credit ratings agencies reacted with ire to the shopping centre operator's third major restructure in the past decade, with Standard & Poor's and Moody's both putting Westfield on negative credit watch.
On Wednesday, Westfield announced it would split its Australian business from its European and North American malls.
According to Moody's, the loss of Westfield's Australian assets - which it considered to be among the group's best shopping centre assets - will have a big negative impact on the company's business profile.
Maurice O'Connell, a Moody's vice-president and senior analyst, said that if the restructure proceeds as planned, Westfield's credit profile would be weaker as a result of lower asset quality, a narrower asset base, and decreased diversity.
In the World Trade Centre deal, Westfield will buy out the shares of the Port Authority of New York and the state of New Jersey, giving Frank Lowy's group 100 per cent ownership as part of his strategy to boost the overseas asset base.
Westfield paid $US612.5 million for its half in July 2011, as part of the joint venture deal with the Port Authority to develop the centre. The retail complex is scheduled to open in 2015. The project will have 34,000 square metres of retail space, with more to be added. The Port Authority owns the six-hectare site. It includes the 72-storey 4 World Trade Centre, developed by Larry Silverstein, which opened last month.
Westfield's co-chief executive, Peter Lowy, said the $US800 million purchase price was subject to a one-time additional contingent payment to the Port Authority within five years of the opening date if Westfield exceeds certain "mutually agreed-upon return thresholds".
The Port Authority and Westfield entered into a joint venture to own and operate the retail space in May, 2012, with Westfield responsible for management and leasing.
On Wednesday, Westfield surprised investors with news it was splitting its business, with the new Scentre Group focusing on Australia and New Zealand and Westfield Corp running the international business in the US, Europe and potentially Brazil.