Westfield to Buy World Trade Center Retail Stake
Westfield Group, Australia's biggest shopping mall operator, will invest $800 million to take full control of the retail space at New York's World Trade Center.
The company agreed to buy Port Authority of New York and New Jersey's 50 percent stake in the retail part of lower Manhattan's World Trade Center site, bringing its investment in the property to more than $1.4 billion, the Sydney-based company and the Port Authority said Wednesday in separate statements.
The group, which Wednesday said it plans to split its domestic and international businesses, is building on that separation with the World Trade Center deal as it bets on faster growth outside its home country. The United States will account for two-thirds of properties managed by the new global business, Westfield Corp., and income from the assets will grow by as much as 6 percent in 2014, it said Wednesday.
"This is a great addition, and it's the type of asset and location that sits neatly with Westfield's strategy," Tony Sherlock, Sydney-based head of property research at Morningstar Australasia Pty. "There's not much risk to this project, and if you want valuation upside, you want it on your balance sheet, not someone else's."
Westfield first acquired a 99-year lease interest in the retail concourse at the original trade center six weeks before it was destroyed in the Sept. 11, 2001, attacks, and sold it back to the Port Authority in December 2003. The group agreed in July 2011 to pay $612.5 million to take a half stake in a joint venture with the Port Authority to develop the center. The retail complex is scheduled to open in 2015.
The project will encompass about 365,000 square feet of retail space, with another 90,000 square feet to be added in future, according to the statement.
The Port Authority owns the 16-acre site. It includes the 72-story 4 World Trade Center, developed by Larry Silverstein, which opened last month; 1 World Trade Center, the Western Hemisphere's tallest skyscraper, set to open in January; the 9/11 memorial, a 9/11 museum, a performing arts center and a mass-transit hub designed by Spanish architect Santiago Calatrava.
Westfield's investment will allow the Port Authority to "refocus agency resources on our core transportation mission," chairman David Samson said in the statement.
Westfield, which jointly owns malls in Australia and New Zealand with Westfield Retail Trust, Wednesday proposed combining their stakes to create a new company called Scentre Group. Its overseas operations, in the United States, U.K. and Italy, would become a separate entity, Westfield Corp., it said.
The move advances its attempts to distance itself from Australia and New Zealand, where it expects to see the slowest growth this year of all its markets. Westfield spun off half of its Australian and New Zealand malls into Westfield Retail Trust in 2010, and billionaire co-founder Frank Lowy and his family sold their 7.1 percent stake in the trust in February.