Westfield mall pact breaks deadlock

By ANNE GIBSON

Australia's Westfield Trust has neutralised the main opponent to its $300 million Newmarket mall and cleared the way to build the largest shopping temple in New Zealand.

Westfield said yesterday it would pay its rival - the Asian-controlled Auckland One - $96.5 million to buy into the existing Two Double Seven shopping mall in Newmarket.

In return, Denis Jen's Auckland One will pay Frank Lowy's Westfield $26.5 million for a half share of the old Mercury Energy development site.

The deal will allow $600 million worth of shops in two giant Newmarket malls and is part of Westfield's plans to spend more than $1 billion on its string of shopping malls in New Zealand.

It also settles the long-running turf war between Jen - a Chinese-born billionaire - and Westfield founder Frank Lowy, a Holocaust survivor who fled to Sydney to become one of Australasia's richest men.

The agreement clears the way for the new Westfield mall, which has been three years in the planning and which will now go through Auckland City Council's resource consent process.

"This joint venture allows us to work closely with the Auckland City Council, who have actively promoted the joint venture, and to integrate the project with existing transport infrastructure, so we can create a world-class inner-city development for the people of Auckland," said Westfield managing director Steven Lowy.

After long community consultation, Westfield released plans in May for a revamped mall on its site.

Westfield New Zealand director John Widdup said at the time that this was a scaled-down version of the 11-level mall the company had initially planned for the site, reducing its value from $450 million to $300 million. The revamped mall is planned to bring 120 specialist shops, 2000 carparks, restaurants and eight picture theatres to the 2.8ha site where the former Mercury Energy buildings stand.

The new mall is designed to flow onto Nuffield St and is the result of Westfield's consultation with 600 people and the outcome of at least 60 meetings.

Auckland mayor John Banks announced the "joint venture" between Widdup and Auckland One's chief executive, Michelle McKellar, at a media briefing at the town hall yesterday.

Auckland One is expanding its Two Double Seven mall to create a $300 million investment on Broadway. The first stage of its expanded mall opened on March 25, but it has plans for further expansion, building many more shops and carparks.

The deal announced yesterday involves Westfield selling a 50 per cent interest in its Newmarket property holdings to Auckland One for $26.5 million; Westfield buying a 50 per cent stake in Two Double Seven for $73.7 million and Westfield buying a 50 per cent interest in Auckland One's additional land holdings facing Broadway for $22.8 million.

No money will change hands until a shopping development is created on the sites or until 2007, whichever is the earlier. The partners will continue to receive the income streams from their original holdings until then.

Banks said the arrangement would end disputes between the two parties.

"We are not interested in lining the pockets of rich and powerful lawyers, so it's not such good news for litigation and fighting across Broadway, but good news for Auckland," Banks said.

Westfield Holdings has been appointed by the new joint venture arrangement to manage and develop all the properties.

Two Double Seven has 61 speciality shops, a Woolworths supermarket and 523 carparks. It sells about $130 million worth of goods a year.

Westfield's site is almost directly across Broadway from 277.

Westfield's expansion plans still face opposition from the Newmarket Protection Society, which says the development will cause traffic problems and threaten the livelihood of existing Newmarket retailers on the Broadway strip.

Without agreement between the parties, Auckland One could have objected to Westfield's plans, which would have cost the Australians time and money in a potentially lengthy resource management objection process.

Now that the most powerful neighbour has backed its plans, Westfield is in a better position to make a new planning application for its scaled-down mall, although Widdup yesterday refused to give any time-frame for its construction.