Growth in Westfield Trust exceeds forecast

03 August 1999

Countries: Australia

Westfield Trust, Australia’s largest listed property trust withassets of $5.9 billion, today announced a distribution tounitholders of $159.7 million for the six months to 30 June 1999,up 24.5% on the previous year. This represents 10.64 cents per unit- up 4.1% on last year, with 40.9% of the distribution taxadvantaged.

Managing Director Steven Lowy said the strong growth indistributions was ahead of forecasts and was particularly pleasingin a low inflation environment.

“This growth in earnings reflects the strength in the underlyingbusiness,” Mr Lowy said. “We’ve seen good sales growth for ourretailers, historically low debtors levels and the occupancy ratecontinuing to exceed 99% of retail space.”

Retail sales across the Westfield Trust shopping centreportfolio in Australia were $6.4 billion, up 3.5% for the last 12months and up 4.6% for the last six months on a comparablebasis.

Specialty stores were up 3.9% for the last 12 months, withgrowth accelerating in the last six months at 4.8% on a comparablebasis.

“The figures show business is strong and our centres aresuccessfully adapting to their changing local markets,” Mr Lowysaid. “We are offering an increasingly diverse shopping andentertainment experience for customers and a thriving, supportivecommercial environment for retailers.

“The best performing centres over the period were those thathave had significant capital invested in development projects toboost their competitive edge. We’ve seen consistently strongresults, for example, from Westfield Shoppingtowns Parramatta,Miranda and Tuggerah in New South Wales, Marion in South Australia,Indooroopilly in Queensland and Doncaster in Melbourne – all ofwhich were substantially redeveloped in the last decade.

Investment in major projects continued to be the focus for thehalf-year, with $1.2 billion being invested at WestfieldShoppingtowns Southland (Vic) $285 million (Trust 50% share $143million); Chermside (Qld) $225 million; Carousel (WA) $200 million;Chatswood (NSW) $200 million and Burwood (NSW) $300 million.

“Burwood was one of Westfield’s first shopping centres openingin 1966,” Mr Lowy said. “In January this year it was demolished andbuilding commenced on a new $300 million shopping centre which, oncompletion in late 2000, will include Grace Bros, Kmart, Target,Coles, Woolworths, around 230 specialty stores, a ten screen cinemacomplex and food court.

“Chermside will also nearly double in size and, on completion inlate 2000, include Myer, Target, Kmart, Bi-Lo and Coles, 220specialty stores, a food court and a new leisure and entertainmentprecinct including a 16 screen cinema complex, restaurants andlifestyle retailers.

“Not only is demand for space across the existing portfoliostrong but we expect that all of our current projects – comprisingmore than 1300 stores – will open fully leased.

“These projects have and are expected to produce yields inexcess of the cost of funds, which together with the improvingperformance of the existing portfolio, is expected to underpinfurther growth in distributions.

“A development highlight in the first half was the opening ofThe Street, Westfield’s newest generation entertainment and leisureprecinct which is stage one of the Southland project. The Streetreflects Westfield’s philosophy on the benefits of merging retailwith entertainment to create a total out-of-home experience.”

Planning continued during the first six months for majorredevelopments at Bondi Junction and Hornsby in Sydney, andFountain Gate in Melbourne.

The first half 1999 was Westfield Trust’s first six months asthe major shareholder in the St Lukes Group, owner of New Zealand’spremier shopping centre portfolio. Sound returns are being achievedon this investment.

The planned expansion and upgrade of the St Lukes portfolio hasalready commenced. In April, St Lukes acquired Queensgate ShoppingCentre in Wellington for NZ$135 million taking its portfolio to 11shopping centres. In July, the Group announced a NZ$100 millionredevelopment of Glenfield, which will be the largest shoppingcentre on Auckland’s north shore.

At 30 June 1999 total assets of Westfield Trust were up 34.5% to$5.9 billion from June 1998, while unitholders’ equity attributableto members of Westfield Trust stood at $3.9 billion, up 22.6% overthe year.

As part of the three yearly valuation cycle, two Australiancentres were revalued during the first half resulting in a $36million increment to the asset revaluation reserve. The centreswere Miranda and Carousel. The Trust’s net asset backing increasedfrom $2.52 to $2.60 per unit over the twelve month period.

Mr Lowy said, barring unforeseen circumstances, Westfield Trustwas well placed to maintain similar distribution growth for thesecond half of the year.