Westfield America Trust increases distribution by 9.2% per unit
06 February 2003
Countries: United States
Westfield America Trust today announced a distribution of $481.4 million for the year to 31 December 2002, which represents 15.3 cents per unit, an increase of 9.2% per unit over the previous year. This distribution is in line with the forecast made at the time of announcing the Rodamco North America transaction in January last year.
“2002 was a transforming year for Westfield America Trust with the purchase of the RNA and Jacobs properties and their integration with the Westfield America portfolio, as well as the related capital transactions. During the year market capitalization increased 109% to $7.1 billion. Profits from trading activities more than doubled to $460.6 million. The RNA and Jacobs transactions have seen Westfield America become one of the leading mall companies in the US and delivered an additional future investment pipeline of US$1.4 billion.” Said Westfield Managing Director, Peter Lowy.
A$ cents per unit
|Profit before Tax:|
|Less Withholding Tax||
|Profit after Tax||
|2002 Total Distribution||
|2001 Total Distribution||
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1 $0.2 million includes the capital gain on the sale of a 25% interest in Garden State Plaza ($11 million) offset by the write-off of the MerchantWired investment recorded in the first half.
2The 2002 distribution includes a net capital payment of $48.6 million (equivalent to 1.55 cents per unit), which reflects the dilutionary effect of receiving the proceeds of various capital raisings prior to the settlement of the RNA transaction in May 2002.
Westfield America Trust’s portfolio of 63 shopping centres, which generates retail sales of approximately US$14 billion per annum, performed well during the year.
Despite an environment where specialty store sales decreased by 1.1% on a comparable basis to $US375 per square foot, the pre-existing portfolio of 39 centres (excluding the centres acquired from RNA and Jacobs), ended the year at 96% leased compared with 95% at 31 December 2001.
The portfolio, including the centres acquired from RNA and Jacobs, was 94% leased at 2002 year-end. Leasing for the Jacobs and RNA closed the year at 90% and 92% respectively, compared to 88% and 90% at acquisition.
“We are very pleased with the result achieved over the last 12 months despite the difficult retailing conditions in the US. We expect that these conditions will continue through 2003 but believe Westfield’s intensive management, particularly in the RNA and Jacobs centres, will underpin the performance of the portfolio in 2003,” said Peter Lowy.
San Francisco Centre – US$380m CBD Retail Project
Westfield America has signed a letter of intent with Forest City Enterprises (a listed US REIT) to commence a major redevelopment and expansion of its San Francisco Centre together with the former Emporium department store (owned by Forest City) located adjacent to the centre. The US$380 million project will include the largest Bloomingdale’s department store outside New York and the largest Nordstrom department store outside Seattle. Upon completion, the centre, with its unique combination of downtown location and department stores, will be one of the pre-eminent retail destinations in the US. The project is expected to commence in the fourth quarter of this year.
RNA and Jacobs
In May 2002, Westfield America completed the acquisition of 23 shopping centres from RNA and the Jacobs Group with a total value of approximately $6 billion. These acquisitions increased the size of the portfolio by 60 percent, to more than 5.8 million square metres of retail space. The centres have been fully integrated into the Westfield operating systems and are performing in line with expectations at the time of purchase.
In December 2002, Westfield America acquired a 50% interest in Fashion Square Sherman Oaks for US$67 million from a US affiliate of the United Kingdom’s Prudential plc. Simultaneously, Prudential’s US affiliate acquired a 25% interest in Westfield America’s Garden State Plaza for US$193.8 million.
San Francisco Centre
In December 2002 the remaining interest in San Francisco Centre was acquired through the issuance of units in the Westfield America operating partnership and the assumption of debt totalling US$62 million. The initial interest in the property was acquired as part of the RNA transaction.
In December 2002, Westfield America agreed to acquire Southgate Plaza shopping centre in Sarasota, Florida for US$62 million. The acquisition was completed in January 2003.
During the 12-month period Westfield America raised $3.0 billion of equity capital. This included:
- $2.4 billion raised for the RNA transaction, which came from a number of sources: an underwritten institutional placement; ABP (the leading Dutch pension fund); Westfield Holdings Limited; existing unitholders and the retail market;
- $253 million through the Distribution Reinvestment Plan
- $155 million through the conversion of existing Partly Paid Units, and
- $200 million by way of an underwritten placement in December 2002.
Completed Investment Projects
The final stage of the US$175 million redevelopment of Westfield Shoppingtown Valley Fair in San Jose, California was opened 100% leased in March 2002.
In September, Westfield Shoppingtown West County, located in St. Louis Missouri, was reopened 2 months ahead of budget after its $US237 million redevelopment and is currently 96% leased. The West County redevelopment features the first and only Nordstrom store in Missouri, along with flagship Famous-Barr and Lord & Taylor stores and a remodelled JCPenney. The centre also houses St. Louis’ first Galyan’s, an outdoor and lifestyle retailer, and more than 175 new specialty stores.
Last September the US$60 million redevelopment of Westfield Shoppingtown South County in St. Louis, Missouri, was completed and is 88% leased.
Current Investment Projects
The Trust’s US$134 million redevelopment of Westfield Shoppingtown Oakridge, in San Jose, California, is progressing according to schedule and is expected to be completed in the first half of 2004.
Palm Desert and Great Northern
Two smaller projects, both of which are due for completion this year, are under way at Westfield Shoppingtowns Palm Desert in Palm Desert, California (US$35 million) and Great Northern in Cleveland, Ohio (US$15 million).
New Investment Projects
Including San Francisco Centre, the company now has approximately US$745 million in new investment projects, which will begin this year and early next year.
The US$98 million redevelopment of Westfield Shoppingtown Santa Anita in Los Angeles, California will shortly commence and will include the addition of a new 16-screen AMC theatre, a relocated 750 seat food court, Borders Books and Music, Sports Chalet, restaurants and approximately 30 new specialty stores. The development is scheduled for completion in the second half of 2004.
Following the announcement last month by Federated Department Stores to build a new Macy’s at Westfield Shoppingtown Wheaton, in Wheaton, Maryland, we can now move ahead with our planned US$90 million redevelopment which includes the new Macy’s, 9,300 square metres of additional specialty store space and parking, as well as the renovation of the existing centre. This project is expected to commence in the second quarter of 2003 and will be completed in late 2005.
Franklin Park and Century City
Planning for two major expansion projects at Westfield Shoppingtowns Franklin Park in Toledo, Ohio and Century City in Los Angeles, California has significantly progressed with city approvals for both plans recently received. Progress on these two projects is ahead of expectations given the recent acquisition of these properties from RNA in May 2002. Commencement of these expansion projects is expected in late 2003 or early 2004.
World Trade Center
The insurance claims and future planning issues relating to the World Trade Center are progressing and will still take some time to resolve. The Trust remains confident that the property insurance policies are adequate to protect its investment.
Other Financial Information
During the year 23 shopping centres were revalued resulting in a revaluation surplus of $150 million.
At 31 December 2002, the Trust’s total assets exceeded $17 billion with a leverage ratio of 46.3%. The tax-advantaged component of the cash distribution of 15.3 cents per unit is approximately 65%. The underlying US dollar earnings were converted into Australian dollars at an average exchange rate of US$0.5614, being the rate achieved after the impact of currency hedging
The Trust experienced a busy period over the last 12 months, successfully integrating the 23 RNA-Jacobs properties while acquiring interests in another two quality centres. Despite a softening retail and operating outlook in the US, Directors believe that the quality of the US properties together with Westfield’s management focus will provide a solid foundation for growth in profits and distributions in 2003.
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Westfield America Trust Annual Result 31 December 2002