Westfield America, Inc. (NYSE:WEA) announces second quater earnings


Countries: United States

Los Angeles, CA, August 1, 2001 – Westfield America, Inc. (NYSE: WEA) today announced its financial results for the second quarter ended June 30, 2001.

Funds from Operations (FFO) were $93.3 million or $0.87 per share for the six months ended June 30, 2001, as compared to $89.5 million or $0.84 per share for the same period last year (restated to comply with the new method of accounting for percentage rents, as discussed below), representing a 3.6% increase on a per share basis. Total mall shop sales increased 5.4% and sales per square foot increased 2.0% on a comparative basis for the six months ended June 30, 2001.

“In tandem with the economy as a whole, our second quarter softened, with specialty store sales flat,” said Westfield America CEO Peter Lowy. “However, with declining energy costs, lower interest rates and expected tax refunds nationwide, we remain cautious but encouraged about the sales outlook for the second half of the year. Additionally, we are very pleased with last week’s execution of the agreement with the Port Authority of New York and New Jersey for the 99-year lease of the World Trade Center retail complex. We are beginning to put our management, leasing and development experience to work at this landmark property.”

During the fourth quarter of 2000, effective January 1, 2000, the Company adopted Staff Accounting Bulletin Number 101 (“SAB 101”) which addresses certain revenue recognition practices, including accounting for percentage rent. SAB 101 requires deferral of the recognition of percentage rent until the tenant’s sales threshold has been exceeded. While annual revenue from percentage rents is not materially impacted by this change, the majority of percentage rent will now be recognized in the third and fourth quarters of each year, rather than spread throughout the year. Had Staff Accounting Bulletin No. 101 not been adopted, Funds from Operations for the six months would have been $0.90 per share.


On May 22, 2001, Westfield America formed a joint venture with J.P. Morgan Fleming Asset Management, Inc. for one of Westfield’s premier regional shopping malls: Westfield Shoppingtown Montgomery in Bethesda, Maryland. The Shoppingtown has a value of approximately $281 million (approximately $123 million net of debt), and The JP Morgan Strategic Property Fund has acquired a 50 percent interest in the joint venture.


On July 24, 2001, Westfield America executed an agreement with the Port Authority of New York and New Jersey to lease the retail component of the World Trade Center for 99 years.

Westfield’s net leasehold covers approximately 427,000 square feet of retail space (“The Mall”). The Mall has 75 specialty stores, restaurants and service retailers, and will be branded “Westfield Shoppingtown World Trade Center.” The Mall has one of the highest producing sales volumes in America with sales in excess of $900 per square foot. It serves 40,000 office workers, 150,000 daily visitors and is an important business and tourism hub.


  • Total mall shop sales for the quarter were $878 million, increasing 3.4% over the same period last year and on a comparable square foot basis sales had no increase.
  • Mall shop space was 94% leased at the end of the quarter compared to 93% last year.
  • Mall shop leases totaling 334,368 square feet were signed during the quarter at rents averaging $43.53 per square foot. Additionally, the Company entered into 98,886 square feet of big box leases at rents averaging $22.03 per square foot.
  • The Company’s pro rata share of consolidated and unconsolidated debt at June 30, 2001, was $2,847.7 million (of which 94% was fixed rate debt), with a weighted average interest rate of 7.25%. Debt to total market capitalization ratio was 56.8%.


  • Total mall shop sales for the six months ended June 30, 2001 were $1.7 billion, a 5.4% increase over the same period last year and a 2.0% increase on a comparable square foot basis.
  • For the six months, mall shop leases totaling 838,600 square feet were signed at rents averaging $42.02 per square foot, representing a 24.6% increase over expiring rents. Additionally, the Company entered into 151,358 square feet of big box leases at rents averaging $27.46 per square foot.
  • Average mall shop rents were $33.82 per square foot, a 4.8% increase over the same period last year and a 3.0% increase since December 31, 2000. Average lease rents including spaces in excess of 20,000 square feet were $30.76 per square foot.
  • The Company’s EBITDA (earnings before interest, taxes, depreciation, amortization and other items) interest coverage ratio for the six months ended June 30, 2001 was 1.9 times.


During the quarter, construction was completed or is currently underway at the following Westfield Shoppingtowns:


ENFIELD, Enfield, Connecticut, is a regional mall with approximately 662,000 square feet of gross leaseable space and is anchored by Sears, Filene’s and Hoyts multiplex cinema. Construction of a new 126,000 square foot Target store commenced in March 2001 for a Fall 2001 opening. The remainder of $11 million redevelopment is scheduled to be completed in Spring 2002.

MONTGOMERY, Bethesda, Maryland, is currently anchored by Nordstrom, Hecht’s and Sears. The May Company acquired the top level of the former JC Penney Store, allowing Hecht’s to relocate its Home Store (opening Fall 2001) and facilitate the expansion and remodeling of its existing store. The Company acquired the lower level of the JC Penney store, enabling the addition of 61,500 square feet of GLA, including a 25,000 square foot Old Navy which opened in June 2001, to enhance the Shoppingtown’s merchandise mix. The total project cost is approximately $19 million.


SOUTH COUNTY, St. Louis, Missouri, launched its $54 million redevelopment on July 20, 2000. The project consists of a new Sears Department Store and two levels of new and reconfigured mall shops totaling 180,000 square feet, along with a new food court and comprehensive renovation of the existing center. Construction is on schedule for a Fall of 2001 opening.

WEST COUNTY, St. Louis, Missouri, commenced its $232 million redevelopment with an official ground breaking ceremony on June 12, 2000. The existing center was closed on January 31, 2001 and has been demolished. Construction of the new flagship Famous Barr is progressing on schedule for an August 2001 re-opening. Upon completion, scheduled for the Fall of 2002, the redeveloped Westfield Shoppingtown West County will re-emerge as a new super-regional mall of more than 1.2 million square feet, including the only Nordstrom in St. Louis, flagship Lord & Taylor and Famous Barr stores and a renovated JC Penney.


PALM DESERT, Palm Desert, California, broke ground in July 2001 on its $30 million redevelopment. The Center is a super-regional shopping center with approximately 870,000 square feet of gross leaseable area anchored by two Robinsons-May stores, a JC Penney store, and two Macy’s stores. The redevelopment, including a new Sears, expanded Macy’s and Robinsons-May, and a comprehensive renovation, will competitively reposition the center in its market.

PROMENADE, Woodland Hills, California, broke ground in August 2000 for the center’s $35 million redevelopment. The project will transform the center into an entertainment/retail center by redesigning the lower level and adding five new destination tenants and restaurants. The second level will be designed and re-merchandized to complement the new lower level tenants and the existing, highly successful AMC Theatre. Upon completion in the Fall of 2001, the new venues, including a Barnes & Noble Superstore, Chick’s Sporting Goods, Total Woman Day Spa and Gym, Maggiano’s and The Corner Bakery are expected to establish the center as a leading lifestyle and entertainment destination in the West San Fernando Valley.

VALLEY FAIR, San Jose, California opened Phase I of its $165 million redevelopment on March 16, 2001, which included the opening of the new 225,000 square foot Nordstrom and 160,000 square feet of new and reconfigured mall shops which opened fully leased. The second phase of the expansion, which includes luxury retailers Tiffany, Kenneth Cole, Fendi and Louis Vuitton in an additional 160,000 square feet of mall shops, is planned for completion in the Spring of 2002.


  • As of June 30, 2001, Westfield America had $321 million outstanding under its $450 million secured revolving corporate line of credit, with unused capacity of $129 million.
  • On July 11, the Company closed a $800 million loan with UBS Warburg Real Estate Investments Inc., (“UBS”) and Lehman Brothers (“Lehman”). The ten year loan is secured by first mortgages on nine Westfield Shoppingtowns: Parkway Plaza, West Covina, Horton Plaza, Fox Hills, Northwest Plaza, Crestwood, Mid Rivers, West Park and Enfield. Interest is provided at 7.2425%. Additionally, UBS and Lehman provided a separate $120.5 million loan secured by Westfield Shoppingtowns Plaza Bonita and Capital Mall. The two-year floating rate loan will facilitate the future redevelopment of these Shoppingtowns. Proceeds from these refinancings were used to repay an existing $754.1 million CMBS facility and to repay a $150 million unsecured loan, both of which mature in December 2001. In connection with these refinancings, the Company reversed $400 million of interest rate swap agreements.


On April 6, 2001, Westfield America Trust (ASX:WFA) completed its tender offer to purchase all outstanding common shares of Westfield America, Inc. not already owned by Westfield America Trust and Westfield Holdings Limited, at a purchase price of $16.25 per share in cash. The tender offer expired at 5:00 p.m., New York City time, on April 6, 2001.

Based on information received from the depositary, a total of 13,619,036 shares of common stock, representing approximately 82.6% of the outstanding common stock of Westfield America, Inc. not already owned by Westfield America Management Limited in its capacity as responsible entity and trustee of Westfield America Trust and Westfield Holdings Limited, were validly tendered in the offer and not withdrawn. All of the tendered shares have been accepted for payment by Westfield America Trust in accordance with the terms of the offer. After giving effect to the purchase of the shares tendered, Westfield America Trust and Westfield Holdings Limited collectively own approximately 96.1% of the outstanding shares of Westfield America, Inc.

Under the terms of the merger agreement between Westfield America Management Limited, in its capacity as responsible entity and trustee of Westfield America Trust, and Westfield America, Inc., dated as of February 14, 2001, Westfield America Trust will complete the acquisition of Westfield America, Inc. by effecting a merger of a subsidiary into Westfield America, Inc., in which the remaining outstanding shares of Westfield America, Inc.s common stock to be acquired will be automatically converted into the right to receive $16.25 per share in cash. Prior to completion of the merger no further dividends will be paid by the Company.

Westfield America, Inc. (NYSE: WEA), a real estate investment trust, is one of the nation’s leading owners of regional shopping centers. The Company owns interests in 40 major shopping centers, branded as Westfield Shoppingtowns. Westfield Shoppingtowns are home to more than 5,000 specialty stores, serve 10 % of the U.S. population and comprise 38.1 million square feet of leasable space in California, Colorado, Connecticut, Maryland, Missouri, New York, North Carolina and Washington. For more information, visit the website at www.westfieldamerica.com.

Certain matters within this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and as such may involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements to differ materially from estimates or expectations expressed or implied by such forward-looking statements. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be attained. These risks are detailed from time to time in the Company’s filings with the Securities and Exchange Commission.

Westfield America, Inc.
Financial Highlights (Unaudited)
(In thousands, except per share amounts)
6 Months Ended

June 30,

June 30,


2000 (1)


2000 (1)

Funds from Operations

$ 45,633

$ 44,842

$ 93,316

$ 89,544

Percent Increase

1.8% 4.2%

Diluted Common Shares Outstanding



73,951 74,448

Common Share Equivalents attributed to:

Investor Unit Rights



5,778 3,521

Preferred Shares



27,729 27,727

Weighted Average Common and Common Equivalent Shares Outstanding



107,458 105,696
FFO Per Share, Fully Diluted $0.43 $0.42 $0.87 $0.84

Percent Increase

2.4% 3.6%

June 30,


2000 (1)

Selected Balance Sheet Information:

Cash and Cash Equivalents

$ 29,480 $ 22,248

Investment in Real Estate, net

3,637,682 3,590,880

Total Assets

3,764,870 3,720,614

Notes Payable

2,506,670 2,493,098

(1) As restated for the adoption of SAB 101 in the fourth Quarter 2000.

Westfield America, Inc.
Financial Highlights (Unaudited)
(In thousands)

3 Months Ended

6 Months Ended

June 30,

June 30,


2000 (1)

2000 (1)


Minimum Rents



$178,291 $170,812

Tenants Recoveries



81,220 78,155

Percentage Rents



4,216 4,976

Total Revenues








82,570 78,876

Management Fees



5,242 4,624

Advisory Fee



4,637 5,408

General and Administrative



943 1,148

Depreciation and Amortization




Total Expenses







108,919 108,888






Equity In Income of Unconsolidated Affiliates

4,324 1,805 8,082 3,448

Interest and Other Income

636 3,467 1,531 8,189

Tender Offers Expenses

(1,869) (3,415)
Interest Rate Swap Reversals (13,275) (13,275)


(5,611) 13,566 (5,846) 28,809

Minority interests

(1,281) (1,202) (3,374) (2,006)

Cumulative Change in Accounting Principle



$(6,892) $12,364 $2,472 $24,782


Net Income (Loss)

$ (6,892) $ 12,364 $ 2,472 $ 24,782
Gain on Sale of Investments

Income Allocable to Investor Unit Rights

790 779 2,163 1,181

Depreciation and Amortization:

Deferred Financing Leases

648 607 1,286 1,203

Consolidated Properties



61,416 54,999

Minority Interest Portion

(421) (334) (791) (670)

Unconsolidated Partnerships

5,448 3,542 10,080 5,955
Cumulative Change in Accounting Principle
Consolidated Properties 2,021
Unconsolidated Properties 143
Minority Interest Portion (70)
Tender Offer Expenses 1,869 3,415
Interest Rate Swap Reversals 13,275 13,275

Funds from Operations



$93,316 $89,544

(1) As restated for the adoption of SAB 101 in the fourth Quarter 2000.

Westfield America, Inc.
Selected Operating Statistics

Six Months Ended

June 30,




Percent change in sales per comparable square foot



Percentage leased(1)

94% 93%

Average base rents(2)

$ 33.82

$ 32.26

Average rent(2) – leases executed

$ 42.02

$ 33.26

– expiring leases

$ 33.72

$ 29.15

– increase



Straight line rents ($000) $1,328 $ 1,658
Comparable NOI growth 4.6% 6.1%

Capital Expenditures ($000)

Tenant allowances

$ 8,703

$ 10,757

Capitalized leasing costs

$ 4,253

$ 4,694

Other capital expenditures

$ 720

$ 1,314


Debt to total market capitalization

56.8% 58.3%
Interest coverage ratio 1.9x 2.0x
Fixed debt ratio 94% 92%
Average remaining term of total debt and hedges (years) 8.1(3) 7.4
Weighted average interest rate 7.60%(3) 7.45%

Excludes Promenade and West County, which are under development.
(2) Excludes spaces in excess of 20,000 square feet.
(3) Reflects July 11, 2001 refinancings.