Unibail Forges Path to US, UK With $16 Billion Westfield Deal

Danny Woods
December 12, 2017

Like Westfield, Unibail-Rodamco is a commercial real estate company specialising in shopping centres.

The announcement comes just a week after Westfield's largest United Kingdom shopping centre rival Intu announced a £3.4 billion deal with property giant Hammerson, set to create the UK's largest property company worth £21 billion.

Under its Australian billionaire chairman and co-founder Frank Lowy, Westfield has pioneered US mall redevelopment, introducing upscale food courts, high-end restaurants, bars, cinemas and boutique fashion outlets to entice shoppers.

Unibail-Rodamco said in a statement that the facility, from Deutsche Bank and Goldman Sachs, would be repaid with senior debt and deeply subordinated hybrids (€2bn), while around €3bn will come from asset sales over the next several years.

Shares of Westfield have declined 9.4 percent this year, headed for their worst performance since 2011.

Westfield has been on Unibail's radar for some years as it looks to increase its holdings in the US.

Unibail-Rodamco SE said Tuesday that its offer values Westfield shares at $7.55 each, a premium of 17.8 per cent on Monday's closing price.

"Our first take is that we are not over-excited about the price - Unibail is buying at an implied initial yield of below four percent", said Peter Papadakos, an analyst at Green Street Advisors in London.

"The U.S.is probably not the market where you'd try to sell" lower quality malls "at this point", Unibail-Rodamco Chief Financial Officer Jaap Tonckens said in an interview with Bloomberg Television.

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"Westfield is also the developer behind the Century City retail hub on the west side of Los Angeles and a new shopping center adjacent to Linate Airport in Milan that is expected to be completed in 2020", reports Chad Bray for the New York Times.

Westfield, which started off in Sydney in the 1950s, is known for its 35 upscale shopping centres in major metropolitan areas, particularly in the USA and Britain.

But beyond that, the family signalled its intention to "maintain a substantial investment in the group" after the sale.

Unibail is Europe's largest commercial real estate company.

Shares of Simon Property Group Inc, the biggest U.S. mall owner, have fallen 8.7 percent this year.

Sir Frank Lowy, chairman of the Westfield board of directors, said the transaction was "the culmination of the strategic journey Westfield has been on since its 2014 restructure".

The U.K.'s biggest publicly traded mall owners are also combining forces.

The mall, now owned by Australian developer Westfield Corp., is being acquired as part of a $15.7 offer by Unibail-Rodamco, headquartered in Paris.

Other reports by LeisureTravelAid

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