Westfield Group, the world's largest owner of shopping centres, will spin off a trust owning stakes in its 54 Australian and New Zealand malls in a bid to reverse a 17 per cent share price decline since a 2004 consolidation.

The new, separately listed real estate investment trust would seek to raise A$3.5 billion ($4.5 billion), the Sydney-based company said in a statement to the Australian stock exchange.

It said Westfield Retail Trust would have A$12.2 billion ($15.7 billion) of assets and a separate management team, while Westfield Group would act as property and development manager.

"They obviously think that the market misprices the group in its current form," said Prasad Patkar, who helps manage about A$1.8 billion at Platypus Asset Management in Sydney.

"Separating the Australian assets into a separate REIT will reduce capital intensity of the group and boost return on equity," Patkar said. "If this one works, you'd expect overseas assets to be spun off in similar transactions in the future."

The move partially reverses a merger of Westfield's three units six years ago which created the world's biggest shopping mall operator. Westfield's share price remains about half its February 2007 peak and has declined 17 per cent since the combined group's public listing in July 2004.

The trust's creation "responds directly to significant market demand for a domestic trust," chairman Frank Lowy said.

"Rather than sell interests in our portfolio to outside parties, this proposal provides the opportunity for our security holders to participate in our joint venture partner and benefit from the ownership of our portfolio in Australia and New Zealand."

- BLOOMBERG