Westfield Corporation will move to the US, abandoning its Australian roots to seek a listing in New York, analysts believe.
The renewed interest in whether the company founded by Frank Lowy would seek an offshore listing was sparked by comments from the executive team on Wednesday, when Westfield handed down a net profit for the six months to December 31 of $US582m ($739m).
The decision by Peter Lowy to remain as co-chief executive of Westfield alongside his younger brother Steven was also seen by many as being linked to the potential change in domicile. The company is believed to be tossing up between London and New York for its new listing.
But the company itself seems unsure about where it should list. Peter Lowy told analysts Westfield was run “very differently to US property trusts which are very fund-from-operations focused’’.
“European REITs are more capital-value focused but neither US nor European REITs are doing anywhere near the level of development work as us,” Mr Lowy said.
“Australia isn’t a perfect fit either because we have no assets there.”
JPMorgan analyst Richard Jones said the broker believed the US was a more likely location for the company, given 38 of the company’s 40 malls are located in America.
“Given its track record in Australia, we believe it makes sense to remain listed here until it proves up its cost of equity in a foreign market, but believe a re-domiciling to the US is likely,” Mr Jones said.
He said delisting in Australia would require shareholder, Federal Court and Foreign Investment Review Board approval as the New York-listed entity would have to purchase the shares off the ASX-listed entity.
“The process would be expected to take four to six months post any decision to change its primary listing,” he said.
UBS analyst Grant McCasker said Peter Lowy’s recommitment to an executive role will increase the speculation of a US listing given the fact he is based in Los Angeles.
Meanwhile, Macquarie analyst Paul Checchin said Westfield could perform another restructure, splitting off its portfolio of regional malls. “We are perhaps jumping at shadows, but the fact that Peter Lowy is now staying on as co-CEO, despite previously announcing that he would step down later this calendar year, suggests to us that a further corporate reorganisation of the company remains highly probable,” Mr Checchin said.
CLSA analyst Sholto Maconochie put Peter Lowy’s decision to stay down to the company’s $US11.4bn development pipeline that includes some major projects in the US.
And Morgan Stanley analyst David Lloyd said it was possible the group could look to a dual listing structure in the US and Australia.
This article first appeared in The Australian Business Review