Bankers and lawyers must truly love Frank Lowy. After the 2010 demerger that led to the listing of Westfield Group and Westfield Retail Trust, the forthcoming launch of Scentre Group is another adviser fee-fest.
It's also the ultimate endgame for the Lowy family - to get out of Westfield's Australasian business altogether.
After selling the family stake in Westfield Retail Trust last year, the Lowy family is likely to eventually sell its stake in the 47 Australian and New Zealand shopping centres that will be the Scentre Group.
Better than anyone, the Lowys understand why the 44 overseas shopping centres to be housed in Westfield Corporation, the newly named Westfield Group, are likely to be better investments than their local counterparts.
To understand why, merely consider the outrageous prices you've been paying in Australian stores over the past few years.
The strange thing is, the profit on that $260 pair of sneakers that costs half that online ended up in Westfield's pocket, not the retailer's.
Anchor tenants like David Jones and Woolworths bring the shoppers into the centres. Westfield gives them very cheap rents. It makes its money from discretionary retailers like Smiggle, Kathmandu, Oroton and JB-Hi Fi, which are charged very high rents.
A higher dollar and, until the arrival of online shopping, ignorance about how much these retailers were ripping us off, meant that Australian consumers were paying ever higher mark ups. As it turned out, the retailers were gouging us, but for Westfield's benefit, not their own.
In 1995 Westfield took an 11.5 per cent cut from the sales of specialty retailers. More recently, that figure has been closer to 15 per cent. Incredibly, many retailers pay more in rents than they actually make in profit.
With consumers wising up and checking online prices in stores, retailers have to get more price competitive, which is why rental costs are under the microscope.
Sharing the pain
You can probably guess the argument to be put to Peter and Steven Lowy: "Look, you made all that money from the great margin expansion. Now we have to lower our prices, why shouldn't you help with the pain from a contraction?"
Mark McInnes, chief executive of Premier Investments, has already made the case and won.
"We said to the landlord: 'We're going to shut' and our rent reduced 30 per cent".
Specialty Fashion meanwhile announced two years ago that it would close 120 of its 909 stores if "current trading conditions continue and rentals remain at their current levels".
With the internet giving retailers an alternative distribution network, the temptation to close unprofitable, marginal stores is strong. Westfield's negotiating position, once dominant, is now much less so.
The latest results confirm the trend. Whilst Westfield management indicated that local specialty sales grew 3 per cent in the December quarter and 4 per cent in January, specialty store rents for the Australian business increased only 1.8 per cent.
Meanwhile, US centres are doing much better. Specialty sales grew 5.7 per cent, supporting an average rent increase of 3.8 per cent. In the UK, despite unemployment still above 7 per cent and flat wage growth, specialty sales grew 3.2 per cent and specialty rents increased 2.7 per cent.
That's one reason the Lowys would prefer the overseas shopping centres to the local outlets. The other is that the international centres offer far more growth potential.
Westfield's newer developments are destinations in themselves, far from the limited suburban malls that characterise the local portfolio. Several new developments are on the drawing board, including an expansion of the successful Westfield London and new centres in Croydon, New York and Milan and redevelopments in San Jose and Los Angeles.
If there is a future for shopping centres - and Westfield clearly believes there is because it's in the midst of a $12bn development program - it will be in these giant, theme-park like shopping citadels.
The new Westfield Corporation will own lots of them. Scentre, at less than half its size, will own just a few and is more rent-challenged.
With only 15-20 per cent of leases being reset each year, its decline will be gradual. But the trend towards lower Australian rents is now well established.
That's why the Lowys are likely to cut their ties with Australian retailing and sell out of Scentre when they get the chance.
This article contains general investment advice only (under AFSL 282288).