Westfield Could Grow Portfolio by 50% in Five Years

By Ross Kelly 

SYDNEY--Australia's Westfield Corp. could grow its property portfolio by 50% in as little as five years, as it continues to build out flashy new malls in places like New York and Milan and considers investing in other assets such as London apartment blocks.

In an interview Wednesday, Joint Chief Executive Peter Lowy said the Sydney-listed company--with assets under management worth US$27.8 billion--has laid out a pipeline of projects that will boost the value of its portfolio by US$11.4 billion. He said the figure excludes potential investments in residential property in London and possible expansions of some of its existing malls.

Westfield, which has a market value of 21 billion Australian dollars (US$17 billion), last year spun off its stable of older malls in Australia and New Zealand to focus on riskier, but potentially more lucrative, opportunities in the U.S. and Europe. It is considering a share-market listing in London or New York.

"If they can repeat what they're doing in places like Milan, anything's possible," said Winston Sammut, managing director of Sydney-based Folkstone Maxim Asset Management. "That kind of growth isn't beyond the realms of possibility, but it could also tempt someone" to take it over.

Westfield is due to begin the phased opening of a new mall at the site of New York's World Trade Center by the end of the year. It also plans to start redeveloping the Century City mall in Los Angeles later this year, and complete the build by late 2017 or early 2018.

Meanwhile, construction of a new megamall in Milan, Italy, could start as soon as 2016 or as late as 2018. "It's easy to see the company has upwards of 50% of its current value to develop again over the next five-to-seven years," Mr. Lowy said.

The son of Westfield's founder and chairman Frank Lowy also revealed on Wednesday that he had reversed his decision to stand down as joint CEO of the company with his brother Steven. He said he had changed his mind at the request of both his father and Westfield's board, adding the company's prospects now looked more exciting.

Mr. Lowy's remarks came on the same day Westfield reported a net loss of US$215 million in the year through December, mainly due to one-off charges associated with the demerger. Westfield's portfolio of U.S. and U.K. malls increased comparable net operating income by 5.3%, as both regions' economies continued to recover.

Westfield said it still wanted to sell another six "noncore" malls this year worth a combined US$1.2 billion--although Mr. Lowy doused speculation among some industry analysts that it was looking to sell a stake in the World Trade Center complex.

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