SYDNEY, Feb. 21 (UPI) -- In writing about Australia's shopping mall king, Frank Lowy, and the Westfield shopping center company he founded, it's hard to pin down the right cliché. Because here is a man that has rewritten the manual on how to run a successful company.
It's the classic rags to riches story. Or in his case, mortadella to malls.
"I'd say that apart from Rupert Murdoch, the only other Australian entrepreneur that has successfully taken a small company and turned it into a very large one is Frank Lowy," says Sydney equities consultant Walter Sheldon.
And he should know. For a start, he's my dad, and I've known for a long time not to argue with him.
For another, with nearly 50 years in the broking game, he's seen more companies come and go than most. Along the way, he's been a Westfield devotee, a Frank (Lowy)ophile.
He's been acquainted with Lowy from the 1950s, when Lowy ran a small delicatessen on the outskirts of Sydney.
"Frank used to serve me a quarter pound of corned beef for lunch," says Sheldon.
No more. These days, Lowy and his three sons, Steven, David and Peter, preside over Australia's fastest moving companies.
In terms of market capitalization, Westfield Holdings, the original entity, which manages the malls, is ranked at 18 on the Australian Stock Exchange. Westfield America, which develops and owns malls in the United States, is at 20, and Westfield Property Trust, which develops and owns malls in Australia, is at 22.
Westfield Holdings has experienced 42 consecutive years of growth.
The one-time shopkeeper is now Australia's second richest man, reckoned by Business Review Weekly to be worth $2.5 billion, just behind media and gambling mogul Kerry Packer.
He owns the biggest string of shopping malls in the country, and the third-biggest mall company in the world. The companies own and manage 63 malls in the United States, and 111 worldwide.
In Australia, an estimated one dollar in 10 spent on shopping goes through a Westfield shopping center.
It's in the United States where action is focused right now. There, Westfield America is teamed with Simon Property Group (the world's largest shopping center owner) in a $4.25 billion hostile takeover of Taubman Centres' 23 malls.
"They're prime assets," Scott Marshall, head of research at Shaw Stockbroking, told United Press International. "Acquiring them is a key step in Westfield's expansion strategy in the U.S."
Although the Taubman family is using its 30 percent block of voting rights to oppose the bid, 85 percent of the common stock has been tendered to Westfield and Simon, and the two companies will press on in an upcoming court challenge on March 21 to gain control.
The deal comes a year after another hostile takeover, of Rodamco Group's 22 U.S. malls.
And two years after, Westfield America purchased a now ill-feted 99-year lease to manage the retail component of the World Trade Center. The lease was signed six weeks before the WTC towers were destroyed. (The developer, Larry Silverstein, and Westfield have the right to rebuild the structures.)
Yes, indeed, Westfield has been busy in the United States since acquiring its first center in 1977. Its deals also include the biggest ever mall transaction at the time when it bought a parcel of malls from Macy's in 1986; and another record breaker when it bought CenterMark's 19 malls in 1994.
For his efforts, Lowy has been named by the International Council of Shopping Centers as one of the world's six pioneers of shopping centers.
Not bad for a guy who arrived in Australia in 1952 from Budapest, Hungary, via the Palestinian territories, with just a suitcase to his name, and set up Westfield with long-time business partner, the late John Saunders.
While selling olives, herrings, cheese and rye bread in their Sydney deli, they began to dabble in property development. By 1958, they took off their aprons and concentrated on property development.
They started their first mall in 1959, floated the company in 1960, and began opening malls around Australia, servicing the 1960s retail boom.
To shareholders, Lowy is a hero. Like Warren Buffett, he has turned loyal punters into millionaires. Westfield's Corporate Affairs Manager, Matthew Abbott, told UPI that A$1000 (about $600) invested in Westfield in 1960 is today worth A$134 million ($80.4 million), assuming all dividends and other benefits were invested in additional Westfield shares.
Little wonder shareholder meetings go with few dissenting voices.
But people like shareholder activist, Stephen Mayne, see the darker side of the Lowy family.
"The Lowys are brilliant and brutal," Mayne told UPI. "You don't stand between the Lowys and a bucket of money."
And to shoppers, there are also mixed reactions.
"I know I can get everything I want here, but there's not much joy," Margaret Faux told UPI at Westfield's Eastgardens shopping mall in Sydney.
"It's so big and spread out it takes you days to go from one end to the other," said another shopper, Tracey Barber.
Just how the Lowy family has managed to grow so fast is the stuff of legend. As they say, the harder you work, the luckier you get. And the Lowys have teamed hard work with a rare business genius.
"They've mastered every chain in the planning process," said Mayne. "They stick to what they're good at, and have been absolutely focused in terms of repeating their model in English-speaking markets."
"We're very good at extracting value," said Westfield's Abbott simply. "The Lowy family has the edge when it comes to sharpening up the way malls are designed, built and managed. They control everything tightly, and leave nothing to chance.
"Westfield has developed an extremely intensive management style," said Scott Marshall. "They use the land very intensively, and get more value out of every square meter. Where they've gone into malls in the U.S., they've rebuilt them, changed the retail mix and lifted occupancy rates dramatically.
"Also, the Lowys are a very tough family to work with", said Marshall. "They're aggressive but fair, but on the aggressive side of the balance. If you're a store owner, you can't live with them, and you can't live without them."
This being the development game, shady tactics have also played their part in Westfield's success. These days, the company is not infrequently embroiled in controversy.
Stephen Mayne's Crikey Web site says: "The only process that Westfield understands is the one that says money can buy you whatever you want. ... Crikey believes Westfield is one of Australia's most unethical companies."
Mayne is referring to Westfield's well publicized donations to labor unions to keep peace on work sites, and to political parties in a bid to win influence in the planning process.
The most celebrated case involved a large payment to Lord Levy, one of Prime Minister Tony Blair's closest and most trusted political aides. In April 2002, The Sunday Times of London reported that Levy was paid to seek planning permission for Westfield to develop seven inner-city shopping malls across Britain, where it is among the biggest retail operators.
Westfield has complemented this top-down influence buying with a bottom-up political approach. In a recent Australian court case, it was revealed how Westfield hired a political lobbyist, Ken Hooper, to run bogus community groups to kill off proposals for rival shopping center developments. Hooper produced a leaflet that screamed: "Stop this development now. Protest to Concord Council before it's too late." He also produced a newsletter warning of the danger of drug peddling near shopping centers.
But as the saying goes, you can't make an omelet without breaking eggs. And today, Westfield is some omelet.
For anyone game to take a punt on the market in these troubled days, all three Westfield companies are still rated a "buy" by most analysts, with attractive yields in the case of the two property trusts, and strong growth potential in the case of Westfield Holdings.
Powering growth is a planned $6 billion development pipeline over the next 10 years, on top of its aggressive acquisitions plans.
"There is still plenty of scope for Westfield to grow in the U.S.," said Marshall, "and its European strategy has only just begun. The next decade will be the decade of growth in Britain."
