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The Sydney Morning Herald

Westfield to appeal terror attack ruling

Author: Carolyn Cummins, Commercial Property Editor
Date: 02/10/2002
Words: 534
          Publication: Sydney Morning Herald
Section: Property
Page: 27
Westfield America Trust is to appeal an adverse court decision made in the US last week on the insurance claim over the World Trade Centre.

Summary judgements delivered by the Federal District Court in New York ruled that three of the insurers of the WTC had provided coverage under the ``Wilprop" form and were, therefore, limited to only one occurrence.

Affected are Westfield America, in conjunction with Silverstein Properties Inc and the Port Authority.

The decision relates to a total of only $US112 million ($207 million) of the $US6.7 billion claim but indicates payments to World Trade Centre claimants will be lower than hoped.

The owners have claimed that the terrorist attacks were two occurrences: the two planes hitting the towers being one event and the towers collapsing another. Under this interpretation, more money would be paid out.

The shopping centre manager and developer, run in the US by Westfield joint managing director Peter Lowy, said late yesterday that the three had accepted a legal suggestion that they pursue expedited appeals.

``As a consequence, the trial of the case, previously scheduled for mid-November, will be deferred pending a decision by the United States Court of Appeals," the trust said.

``Judge Martin has indicated that he is willing to endorse an appeal on the legal question as to whether the events of September 11 constitute one or two occurrences under the Travelers Insurance policy form.

``Judge Martin also indicated that once the legal issues governing coverage were determined on appeal, he would be willing to commence the trial promptly.

``The trust believes that an expedited appeal of these issues will advance the final resolution of the insurance claim. The trust reiterates that it remains confident that the property insurance policies are adequate to protect its investment and to reimburse it for expected business interruption losses due to the terrorist attacks."

Analysts have said that the main issue for Westfield America, which owns the lease on the 40,000 sq m shopping plaza underneath the towers, remains getting plans approved to rebuild the complex.

Westfield took out terrorist insurance when it bought the lease in May 2001 and is expecting to receive up to $3 billion from that policy. Already $US150 million in insurance proceeds has been paid, of which Westfield America Trust's share is $US17.3 million.

Westfield America originally had 22 claims but settled three shortly after the attacks.

The other 17 claims cover a myriad of issues and are expected to take years to get through the courts.

Westfield America is moving ahead with the integration of its Rodamco assets that it bought in a hard-fought battle earlier this year.

The trust has also reopened its Westfield Shoppingtown West County, in Des Peres, Missouri, recently after a $US237 million redevelopment.

UBS Warburg has rated the Westfield America a ``buy" in its latest research document, saying the trust had growth potential through acquisition given the fragmented nature of the US retail market.

``An estimated 50 per cent of US regional centres are owned by the listed real estate investment trust, providing opportunities to acquire from private investors and companies," Warburg said.

 
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