Westfield Goes Shopping in New York Ahead of Split

Westfield Group will shell out $800 million for full control of the retail wing of the new World Trade Center development, bolstering the Australian company's shopping mall empire ahead of its planned carve-up into international and domestic businesses.

The Port Authority of New York and New Jersey will sell its 50% stake in the Lower Manhattan retail site to the Sydney-based company, the two companies said separately. The purchase will take Westfield's investment in the project to more than US$1.4 billion, which it said will allow it to reduce development risk.

The agreement comes on the heels of a move by Westfield to merge its Australian and New Zealand malls with Westfield Retail Trust (WRT.AU), which it spun off in 2010, to form a new company that will be called Scentre Group. That will leave a renamed Westfield Corp. to focus on shopping centers in Europe and the U.S., including New York's World Trade Center and the expansion of the Century City mall in Los Angeles.

Westfield bought a 99-year lease in the World Trade Center's retail facilities in mid-2001 and then entered a joint venture to own and operate the space with the Port Authority in 2012, with Westfield in charge of management and leasing. The premises cover about 365,000 square feet on several levels, including street-level real estate on Church St., Cortland Way and Dey St. and three floors in Towers 3 and 4.

The initial phase of the retail complex is expected to open in 2015 and Westfield said its deal with the Port Authority includes an additional one-time payment within five years of the opening date if returns exceed certain thresholds.

"Since 2001, Westfield has believed in and remained committed to investing in this site and in this city. We take great pride and pleasure in amplifying that commitment," Peter Lowy, co-chief executive of Westfield, said.

The Port Authority said it will retain ownership of the World Trade Center transportation hub, an integrated network of underground pedestrian walkways connecting commuters and visitors to subway lines and the redeveloped Fulton Street Transit Center. Authority Chairman David Samson said the sale to Westfield will allow his company to focus on transportation.

Westfield, which began with a single shopping center in a suburb of Sydney in 1959 and now owns malls around the world, Wednesday said it would sell its 50% interest in its Australian and New Zealand businesses to Westfield Retail Trust, which already owns the other 50%. The new Scentre Group and Westfield will be listed with separate boards and management teams, although Westfield co-founder and Chairman Frank Lowy will be chairman of both.

Shares in Westfield, which climbed almost 4.1% Wednesday, were about 0.9% lower midday Thursday; Westfield Retail Trust was down 1.5% in an overall broadly negative Australian market.

Write to Robb M. Stewart at [e-mail] and Ross Kelly at [e-mail]

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