Lowy sells last slice of shopping centre empire

The move cuts the family’s ties with the shopping centre company that grew from a single centre that opened in Blacktown in western Sydney into a global empire that took in the best centres in New York and London.

Sir Frank, who has been in Sydney overseeing the sell down and hosting a major foreign policy speech by prime minister Scott Morrison at the Lowy Institute, has been at the pinnacle of the shopping centre industry for decades.

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The sell down of his interests through investment bank UBS also sent a chill wind through the listed real estate investment trust sector as many stock holders, large and small, have followed the “Westfield way” that had taken the group around the world.

The stake comprises 3.9 per cent of the company’s stock, with 206.1 million shares divested to institutions in what marked the largest ever REIT block trade in Australian history and the first time the Lowy family sold down in the vehicle, prompting bids from a wide range of existing institutional investors.

The sale came after the stock traded through $4 and the shares were sold at $3.956, a slim 1.03 per cent discount to the closing price of $4.01.

After 60 years in public markets, the Westfield co-founder has been reorganising his interests after moving to Israel last year and setting up his family, via the private Lowy Family Group, for investments in new sectors.

Sir Frank, who was born in 1930 and survived the Holocaust in Hungary, became an Israeli citizen in February. But he retains deep ties to Australia and argued for a new approach to infrastructure spending just this week.

He was knighted in 2017 and ranked as Australia’s 6th richest person on this year’s The List with a fortune of $8.92bn, a result of an extraordinary lifetime of corporate deal-making.

He co-founded the Westfield empire with John Saunders, growing locally and then forging into the US and later Britain. The first signs of an exit came with the split of the group into local and international arms, with the offshore component sold to French group Unibail-Rodamco in a $32bn deal finalised last year.

Scentre was created in June 2014 when the Westfield Group separated its American and European businesses from its operations in Australia and New Zealand and it remained listed as a shopping centre portfolio that has investments in 41 shopping centres across Australasia.

The last Lowy family representative, Steven, stepped down from its board in April. With brother Peter, Steven was co-chief executive of Westfield Corporation, ahead of its sale to Unibail-Rodamco, with Sir Frank at the helm.

Scentre, with total assets under management of $54.6bn, is staying bullish on the outlook for top retail outlets but the Lowy family has been cutting its local exposure over the last decade.

In 2013, the family sold its 7.1% stake in the Westfield Retail Trust, which owned Australian malls, for about $664 million.

Steven Lowy, will also stand down as chairman of the OneMarket technology business that was spun off as part of the sale to the French group, as it is wound up after failing to find its feet on the listed market.

Scentre has been battered by the harsh winds of e-commerce and the shift to digital retailing, with the Lowy family also cutting ties with its famed international empire.

Peter Lowy earlier this year stepped down from the Unibail-Rodamco board at its May annual meeting, ending the Lowy family’s dominance of Westfield boardrooms over two generations and more than 50 years.

The Lowy family had a 2.6% stake in Unibail-Rodamco but shares of international retailers have fallen heavily.

However, the Westfield name is still going into new markets with the French company remaking key European centres with the Australian brand, keeping the company’s heritage, from when its first development, Westfield Place, opened in 1959 in Blacktown, alive.

The sell down came in a rare week of senior executive turnover at Scentre, with longstanding chief operating officer Greg Miles flagging his departure next year and chief strategy officer Cynthia Whelan also leaving.

Scentre has declared it will flatten its structure around CEO Peter Allen but observers also noted the rise of chief financial officer Elliott Rusanow.

Those close to the sell down last night played down suggestions of a corporate takeover of Scentre.

Scentre trimmed its earning guidance at its August results after successfully selling off major assets and analysts held concerns that its metrics were softening.

The sale also positions the Lowy Family Group for the next phase of investing and it is already backing a new property fund in Australia looking for opportunistic plays, with the aid of former Westfield executive Michael Gutman and the Alceon operation.

The group has launched a series of ventures in fields ranging from health, cybersecurity and theatre, confirming Sir Frank’s entrepreneurial streak.

The Lowy exit marks the end of an era and signals new challenges for the retail sector.

Department stores Myer and David Jones are ailing but the departing Miles pointed to the surge in luxury retailers and predicted more would come into Australia.

He warned that not all shopping centres would come through the industry’s challenges but the local Westfield empire had been dramatically reshaped by asset sales in recent years and efforts to integrate with e-commerce.

– with Bridget Carter

This article originally appeared on www.theaustralian.com.au/property.