Westfield Corp., the operator of the World Trade Center mall in Lower Manhattan, Garden State Plaza in Northern New Jersey and several upscale shopping centers in London, has agreed to a $15.7 billion takeover by another giant in the shopping center industry: Unibail-Rodamco.
The deal combines two of the biggest mall operators in the world at a time when malls are going through many well-publicized struggles, according to the Wall Street Journal. Westfield shares had been down 9 percent this year prior to the deal being made public, and the company has spent years lowering its retail exposure.
Frank Lowy, the chairman of Westfield, will retire as part of the deal, while his sons Peter and Steven will resign as the company’s co-chief executives. Unibail Chief Executive Christophe Cuviller will head up the new company. Unibail, based in Paris, operates malls in Western and Central Europe. Some of its holdings include the Forum des Halles and the Les 4 Temps malls in Paris as well as the Gropius in Berlin. The move for Westfield gives Unibail access to the London market.
The Lowy family saw the move as a chance to recover value for their shareholders, the Wall Street Journal reported, while Unibail executives saw a chance to increase their company’s portfolio of centers in more affluent areas of the U.S. and U.K. with a wide range of amenities, such as movie theaters.
According to Bloomberg, more than 70 percent of Westfield’s 2016 revenue came in the U.S.
Mall operators have been struggling in recent years as online shopping continues to gain in popularity and have been pulling out all the stops to attract shoppers, adding amenities ranging from fitness centers to ice rinks.
Westfield had recently tried to focus on the higher end of the market, and its $1.4 billion mall in the World Trade Center opened last year, which executives thought would see massive foot traffic from office workers and tourists.
However, an analysis from June of this year by The Real Deal found that about 20 percent of space in the mall remained unoccupied, and consensus among the industry was that the mall did not get off to a great start, with one expert calling it a “disaster.”
Earlier this week, mall real estate investment trust General Growth Properties rejected a $14.8 billion bid from Brookfield Property Partners. Brookfield is expected to submit another bid. [WSJ] – Eddie Small