Chairman’s address at the meeting of all Westfield investors held Friday 25 June 2004 at the Sydney Entertainment Centre Habour Street, Haymarket commencing 10:00AM

25 June 2004

Countries: Australia


This is an historic day for Westfield, and just a little bit nostalgic for me.

It was 44 years ago that Westfield Development Corporation was listed on the Sydney Stock Exchange.

In those days our activities didnt reach beyond Sydney. My partner, the late John Saunders and I had big dreams, there is no doubt about that, but neither of us could have predicted such a future.

Today, we are here to seek your approval for a Merger which will make Westfield the largest listed retail property group in the world, with a portfolio of shopping centres that spreads across Australia, New Zealand, the United States and United Kingdom.

I am very proud, and I know John would have been very proud, of the Westfield Groups achievements.

Im proud of the boards, our executives and all our staff whove made it possible.

Im also proud that investors in the various Westfield entities have been rewarded with superior returns.

But even though today is very historic, I wont allow myself to be too nostalgic.

I think one of the reasons weve been successful is that we dont dwell too much on the past. Weve always been more focussed on the future.

Weve always moved with the times, and tried to make sure were in a good position to take advantage of the next wave of opportunities.

That is really what the Merger proposal is all about.

As I said in my recent letter to you, the rationale behind the Merger is all about growth and global opportunities.

Today, these opportunities require substantial financial capacity and a balance sheet larger than that of any one of the existing Westfield entities.

Under the current structure, Westfield America Trust has an excellent portfolio, but the high cost of capital relative to its competitors in the US means its potential is somewhat constrained.

Westfield Trust also has a very high quality portfolio but its future growth is limited by the size of the Australian and New Zealand markets.

Under the Merger proposal, both these constraints will be removed. Both entities will gain direct exposure to the UK market through Westfield Holdings shopping centre portfolio there, and, potentially, other markets in the future.

Both entities will also benefit from Westfield Holdings knowledge base and experience in the shopping centre business, its brand and its global operating platform.

For Westfield Holdings, the Merger will create a global operating and financial structure to match the global opportunities and achieve a greater balance between income and capital growth through direct exposure to the underlying property portfolios of Westfield Trust and Westfield America Trust.

The proposal will create an internally-managed, vertically-integrated Group combining ownership, development, design, construction, funds and asset management, property management, leasing and marketing of shopping centres on a global scale.

In short, the Merger will combine the financial strength and capabilities of each entity to provide the Group with the scale it needs to pursue growth opportunities internationally.

This is the next step in the evolution of Westfield. We first listed in 1960; then in 1982 we listed Westfield Trust and in 1996 we created Westfield America Trust.

All of these changes anticipated the general market conditions and expectations.

Todays Merger continues that theme.

The proposal was announced on April 22 and since then you have received detailed information about the Merger in the Explanatory Memorandum.

I know the Memorandum was quite bulky, and there was a lot of detail, but Im afraid that was necessary given the legal requirements of what is a very large and complex transaction.

The Memorandum included a report from the Independent Expert who has found that the proposal is in the best interests of investors in all three Westfield entities.

The proposal has the unanimous support of the Directors of each of the Westfield entities who have recommended that you vote in favour of the Merger. The Lowy family also wholeheartedly supports the proposal and remains committed to the Westfield Group.

Generally, the proposal has been very well received.

Since it was announced there have been strong increases in the prices of securities in each of the Westfield entities.

Since the beginning of April to the close of business yesterday, Westfield America Trust units have risen from $1.98 to $2.41; Westfield Trust units have risen from $3.66 to $4.45; and, Westfield Holdings shares have risen from $13.29 to $15.60.

As shown on the slide, at the beginning of April the combined market capitalisation of all entities was $22.2 billion which has now increased to $26.6 as of yesterday. Thats an increase in excess of $4.4 billion to the market capitalisation of the group.

Ladies and gentlemen, while our corporate and financial structure will change as a result of the Merger, our operating philosophy will not.

We have been, and will always be, a growth-oriented, intensively-managed business. Our day-to-day operations will remain as focussed as ever and we will continue to examine opportunities for further growth in existing markets and look to open up new markets as well.

I am also pleased to report that our operations in Australia, New Zealand, the US and the UK continue to perform well.

For the first quarter of the year, total retail sales increased by 10.0% in Australia, 5% in New Zealand, 2.3% in the UK and 9% in the US. Since that time we have seen this good sales environment continue in each market. Our portfolio occupancy remains at very high levels and at the top end of our peers globally.

The $7.0 billion global redevelopment programme continues to make significant progress with Bondi Junction nearing completion. This is truly a world class shopping centre and I am pleased to report that the new centre has received a great reception from customers and the early indications are that the retailers are performing well.

Again, I would like to assure our members that, as the performance of the business demonstrates, despite running this large and complex transaction, our focus on the business remains as intensive as ever.

There has been some discussion and queries on the composition of the new Board which will be common to each entity if the Merger proceeds. We have said in the documents that the new Board will comprise a majority of independent directors who will be drawn from the existing non-executive directors serving on the various Boards. Decisions on the final composition of the Board have not been taken.

As I have said before, in my view it would have been inappropriate to nominate the new Westfield Group Board before members had approved the Merger. Apart from pre-empting the decision of members on the Merger, it may have created a perceived conflict of interest for any director who was nominated for the new Westfield Group Board. It should also be noted that any directors appointed to the new Board will need to be re-elected at the next Annual General Meeting.

On Corporate Governance issues generally, the Westfield Group will comply fully with the ASX Principles of Good Corporate Governance with the exception that I will remain as executive Chairman.

Before we open the meeting up for general discussion and questions, Id like to show you a short video which summarises the development of the group over the past 44 years, and what the Westfield brand stands for today.