Unibail reaches US, UK with $16bn Westfield deal

Bloomberg

As mall owners around the world seek a defense against Amazon.com Inc, Europe’s largest commercial landlord is betting the solution lies across the Atlantic.
Unibail-Rodamco SE’s agreement to buy Australia’s Westfield Corp. for about $15.8 billion gives it control of mega malls in North America and London as landlords try to compete with internet retailers by focussing on the best properties.
The Paris-based company also wants to boost demand for its stores by tempting US retailers in Westfield’s malls to expand into Europe and its own tenants to open in North America, according to a person with knowledge of the matter.
Fears that more malls will become redundant as online shopping grows has caused share prices across the retail property industry to fall, prompting a wave of consolidation as the biggest operators try to take advantage of the discounts to add better malls and cut operating costs.
Unibail-Rodamco began negotiations with Westfield about six weeks ago, the Australian company’s billionaire founder Frank Lowy said at a press conference.
The landlord saw an opportunity as the Lowy family sought to move from being managers to investors, the person said,
asking not to be identified as they were not authorised to speak to the media. A spokeswoman for Unibail-Rodamco declined to comment.
“The deal shows that scale is essential in a market where mall-space requirements are changing rapidly, a motivation that also triggered the recent Hammerson-Intu deal,” Bloomberg Intelligence analyst Sue Munden wrote. The acquisition “creates a dominant European and US mall operator with an unrivalled portfolio of destination malls and a portfolio value of $72 billion.”
Unibail-Rodamco was formed in 2007 from a merger of France’s Unibail—an owner of malls, offices and convention centres—and retail specialist Rodamco Europe, which was based in Rotterdam, the Netherlands. The company, run by Christophe Cuvillier since 2013, has been selling large office developments and weaker retail assets across Europe and reinvesting the money into developing new, dominant malls.
The firm expects to sell a further 3 billion euros ($3.5 billion) of assets over the coming years, according to a statement announcing the deal.
Unibail-Rodamco expects the Westfield purchase, due to complete in the first half of 2018, to result in savings and synergies
of about 100 million euros
annually, the company said in
a statement. It is expected to
be accretive to earnings in the first full year.