By Peter Lowy

Peter Lowy is the co-managing director of The Westfield Group.

During a period of less than 30 days, Westfield opened significant developments in four countries, with a value of more than $1 billion. On Oct. 9, 2007 the $696 million Westfield Derby debuted in England. On Oct. 18 and 25 in Australia, $321 million in redevelopment opened at Newcastle and Brisbane. On Nov. 1, $150 million revitalization in Maryland and a $200 million project in Auckland, New Zealand launched on the same day. What could be more global?

Our industry is rapidly changing and expanding. Over the past few years, several countries have adopted REIT legislation. REITs are increasingly gaining stature outside the U.S. as they conduct business throughout the world. Westfield for example, has an equity market capitalization in excess of $36.8 billion, with more than 35 percent of the stock held outside of Australia. We’ll continue to see more globalization across the larger real estate investment community in the coming years.

Globalization is leading to a somewhat bifurcated REIT market for investors where they can choose between asset classes and operators and companies that invest only locally, regionally or globally. Additionally, there’s a growing number of investors looking into securitized real estate that want to invest globally as well as home markets.

Over the last few years, investors’ thirst for secure, yield-oriented investments has been driving demand of REIT and REIT-like shares. Increased capital flows to all types of real estate investments have made deploying capital in the U.S. and most other markets more challenging.

We recognize that each market has its own distinct character. To be successful in any market, you must learn it. Although the basic underpinnings of the mall business are similar in most markets, for the Westfield Group, it is essential that we understand the unique characteristics of a locale along with its opportunities.
Local legislation also plays a fundamental role in decisions to invest outside of your home market. If you’re unable to distribute dividends to investors in a tax efficient manner, the rationale for investing globally will be seriously tested.

However, matters such as currency risks, management of a world-wide balance sheet, capital allocation issues, differing accounting rules and tax management make a relatively straightforward business increasingly complex. The amount of time and resources allocated to such concerns are staggering, but, if handled correctly, can be very rewarding as well.