Xviii) Westfield Group

Westfield

"...subscribe to the school of thought that everything is vulnerable. Even something that has had a long term success, it's only a knife edge away from failure. If you look at it like that you will work really hard to manage each facet of your life, because any one of them could crumble at any moment..."

Steven Lowy as quoted by Jemima Whyte, 2014

"...I know a tonne of kids who have done great at school and have replicated that in life, and I know lots of kids who did poorly at school who have had outstanding lives..."

Steven Lowy as quoted by Jemima Whyte, 2014

"...I find you deal with things in a disciplined manner, one at a time, you can deal with issues that seem insurmountable. They become surmountable. When they break down into compartmental bits..."

Steven Lowy as quoted by Jemima Whyte, 2014

· This firm was started around 60 years ago in a single smallgoods store in Blacktown, New South Wales (Australia) by Frank Lowy. Westfield has used very ambitious, costly restructuring and bold moves as ways to continually re-invent itself and is a global shopping centre empire. Some examples:

- in 1979 Westfield Trust was spun off as a separate property trust investment vehicle from the development arm, Westfield Holdings

- in 2001 the group secured the management rights to Rodamco North America after a hard-fought corporate restructure battle

- in 2004 it rolled together 3 shopping centres and developer entities (Westfield Holdings) and Westfield America to create a $22 billion Westfield group

- in 2006, they took on British developers, Simon and David Ruebens, to secure control of the Stratford City shopping centre near the Olympic Village

- in 2010 they hived off the property assets from the management rights to create Westfield Retail Trust and shopping centre management business, Westfield Group

 · Westfield is worth around US$ 70 billion (2014)

· If you had invested $1,000 in Westfield Development in 1960 at its listing and re-invested all dividends, etc, this investment would have been worth around $170 million in 2010. A similar investment in the All Ordinaries Index, in contrast, would be worth $165,000.

 · Frank Lowy is the richest man in Australia with an estimated of around $7 billion (2013).

. The restructuring of Westfield's property empire in June 2014 has increased the combined market capitalisation (Westfield Corporation & Scentre) by around A $12 b. (October 2015)

- The international strategy is to moves out of mid-market centres and focus on enormous, top-end centres full of luxury retailers in the kind of fit out, restaurants, bars and other offerings that luxury goods consumers might like online shopping is one of the biggest challenges for "bricks and mortar" retailers. To help handle this, retailers use apps and big data to look at factors like how the traffic is, where the available car parks are and helping customers to get free parking at their stores Ford, the automotive giant attempting to transform itself into an "auto and mobility" firm, by opening FordHub in the Westfield World Trade Centre (2016). "...it is a storefront, not a dealership, where consumers can see Ford's latest innovations, talk to "FordGuides" about mobility services and enjoy events..." Robert Harley, 2016 These are not about selling products, they are about capturing people's thoughts to help solve transportation issues of today and tomorrow. Westfield is aiming to connect the physical and digital worlds; not about a choice between them, ie the best centres in great locations combined with a vibrant and totally integrated digital experience. It has launched digital express parking, indoor mapping, advance food ordering, online product search plus a data and analytics unit to work with retailers to better understand and use the data generated from millions of visitors, ie customers will have digital access to premium services and amenities, and interactive directories. Westfield's initial mantra was "growth, growth, growth" with the US portfolio of malls around 61 in 2001. But given the GFC, digital revolution and changes in retailing, Westfield is now focusing on iconic centres in the biggest markets and selling their secondary malls.  Five decades ago Westfield was in the forefront of developing shopping malls linked with cars to the suburbs.  Now its business is moving with its customers to the mass transit and urban core, opening in the best, high traffic locations in cities like London, New York and Los Angeles.

- E-commerce has resulted in fewer customers visiting physical stores. Thus rental returns are under pressure for landlords like Westfield.

"...While people are still shopping at retail stores, the immense growth in e-commerce has meant that major companies are shifting their focus towards online capabilities. The same amount of product is going out to customers, but through different channels. The rise of e-commerce has led to divestment in retail space and an explosion of industrial market land uptake, which could have heavily impacted retail building owners, such as Westfield..."
Travis Erridge as quoted by Matthew Cranston et al, 2017

The pandemic starting in 2020 has encouraged the swing away from physical stores as people like minimising exposure to crowds and social distancing.

Thus, Westfield is aiming to become a retail tech company rather than a real-estate company.

In summary

In his mid-20s, Frank Lowy and John Saunders started their building company. By the time he was 30, Lowy's Westfield had floated on the Australian stock-market.
By the late 1970s they had expanded into the USA.

"..In 1980......splitting Westfield into a holding company and a property trust, increasing shareholder value eightfold in the process..."
Jill Margo, 2021

By 2000 they were operating in Britain
"...By 2008, Westfield was in the heart of London, with the newest and biggest shopping centre in Europe. By 2010, flags were flying on another mega-mall at the entrance to London's Olympic site..."
Jill Margo, 2021

"...Westfield was always evolving and adapting. Along the way, it changed its goal from accumulating as many shopping centres as possible, to shedding the outdated ones and creating iconic malls. Capital restructuring happened again in 2004, when Lowy merged the 3 Westfield identities into one, creating a leviathan that survived the global financial crisis and emerged stronger with a healthy war chest......in 2010 it split again and then, in 2013 announced he would......creating two distinct businesses. All the Australian and New Zealand assets would go into a new company called Scentre Group, while all international assets would go into Westfield......the demerger went ahead in 2014 and created more than A$ 10 billion in shareholder value......in 2016 he was opening a new Westfield mall - in the rebuilt World Trade Center in New York..."
Jill Margo, 2021

Later
"...When he sold it to the French mall giant UniBail-Rodamco for A$ 32 million, he achieved the unusual fleet of co-founding and selling an ASX top 20 companies in one generation..."

Jill Margo, 2021

This sale allowed the Lowy family to transition from being an operator to investors, ie 60% of their assets are invested in global companies, 20% in technology via private equity and 20% in real estate.

 

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