Westfield to spin off Australian mall assets


* New Westfield to have $18 bln in international assets

* Australia/NZ retail assets to combine with WestfieldRetail Trust

* Westfield, WRT securities have underperformed this year

By Maggie Lu Yueyang

SYDNEY, Dec 4 (Reuters) - Shopping mall giant WestfieldGroup said on Wednesday it plans to separate its globalretail assets from its Australia and New Zealand businesses,which will be merged with Westfield Retail Trust (WRT) to form a new company.

The restructuring comes at a time when traditionalAustralian retailers are struggling with slowing growth and ashift to online shopping, and will put a clearer focus on thegroup's mainly U.S. and UK international assets.

"The international portfolio is the only place that they aregoing to get growth. The Australian market for them is going tobe tough and it's getting harder and harder for them to gougetenants," said Donald Williams, chief investment officer atPlatypus Asset Management.

The two new entities - Scentre Group in Australia and NewZealand and Westfield Corp for the international portfolio -will be listed on the ASX and have separate boards andmanagements, the companies said in a joint statement.

"Westfield's international business and its Australian/NZbusiness have both grown in scale and quality to the stage wherethey can now stand on their own," Westfield Chairman Frank Lowysaid in a statement.

Both groups will retain the Westfield brand on theirshopping centres and Lowy will become chairman of bothcompanies.

The new Westfield Corp will have total assets of $17.6billion, comprising interests in 44 centres in the UnitedStates, the United Kingdom and Europe, including WestfieldLondon and Stratford City in London and Westfield World TradeCenter in New York.

The new Scentre Group will have total assets of A$28.5billion ($26 billion) through its interests in 47 shoppingcentres in Australia and New Zealand.

The restructure would deliver 5.2 percent accretion to WRT'sFunds from Operations (FFO) per security and 2.9 percentaccretion per security for WDC for 2014, Westfield said.

"For WDC, that vehicle probably has high return on equityand high growth, and for WRT, it does not look fantasticallycompelling at this point," said a REIT analyst, who declined tobe named.

"For the merged vehicle (Scentre Group), the fundamentalsare still pretty soft," he added, noting that it was doublinggearing to get the earnings growth.

Under the proposal, WRT security holders will receive A$285and 918 securities in the new Scentre Group for every 1,000 WRTsecurities held, and Westfield holders will receive 1,000securities in the new Westfield Corp and 1,246 securities inScentre Group for every 1,000 WDC securities held.

The deal has the unanimous support of the Westfield boardand the independent directors of the WRT board, but is subjectto security holder approval, expected to be voted on in May nextyear.

Securities in Westfield and WRT were on a delayed open onWednesday.

Westfield securities have fallen 1.9 percent so far thisyear and WRT is down 0.7 percent, both underperforming a 13percent rise in the benchmark S&P/ASX 200 Index.

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