Westfield America Trust reports 38% profit increase

02 August 2001

Countries: United States

Westfield America Trust today announced a profit after tax of $91.6 million for the six months to 30 June 2001, up 37.7% on the same period last year.

This result represents 6.75 cents per unit, an increase of 5.8% over the previous corresponding period. The underlying US dollar earnings were converted into Australian dollars at an average exchange rate of US$0.6051.

The profit is after US withholding tax for which Australian investors receive a tax credit.

Managing Director of Westfield’s US business, Mr Peter Lowy, said the result was pleasing given a softening retail sales environment and reflected Westfield’s intensive management approach.

Demand for space by retailers continues to be strong with newly redeveloped centres opening on time and on budget and total portfolio specialty store space 94% leased.

Retail mall shop sales in Westfield America’s portfolio of US shopping centres during the period totalled US$1.7 billion, an increase of 2.0% on a comparable basis over the same period last year. This is consistent with the slowing in growth of retail sales from the very strong growth recorded in the past few years.

Profit summary:
June Half year


A$ cents per unit



% Incr*



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Operating profit before tax







US withholding tax thereon





Operating profit after tax







* % increase over previous year

Acquisition of publicly held common shares in Westfield America, Inc.

During the period, Westfield America Trust launched a tender offer to acquire all outstanding common shares in Westfield America, Inc. held by the public. When the tender offer closed in April, Westfield America Trust and Westfield Holdings held 96.1% of Westfield America Inc.’s common shares. Westfield America Trust now intends to proceed with the necessary steps to acquire the balance of common shares held by the public in Westfield America, Inc.

Capital Raising

During the period, in addition to Distribution Reinvestment proceeds, Westfield America Trust raised $705 million of equity capital.

In order to fund the acquisition of minority interests in Westfield America, Inc., Westfield America Trust issued $450 million of ordinary units and $100 million of redeemable converting preference units in the June half year. The equity issue of $450 million included $150 million of oversubscriptions thus making it the largest placement in the history of the listed property market in Australia.

In June 2001 Westfield America Trust raised $155 million through the conversion of partly-paid units. These funds were raised to subscribe for additional equity in Westfield America, Inc.

Property transactions

The highlight of the period under review was the agreement announced in April and completed in July for Westfield America to acquire a long-term lease for the retail component of the World Trade Center in New York for 99 years. This property will be re-branded Westfield Shoppingtown World Trade Center.

Westfield’s leasehold interest covers approximately 40,000 square metres of retail space, which has one of the highest producing sales volumes in the US, with sales in excess of US$9,700 per square metre. The retail area serves 40,000 office workers, 150,000 daily visitors and is an important business and tourism hub.

Peter Lowy said the World Trade Center represented a special opportunity for the company to demonstrate its skill at redeveloping retail space and its intense management focus at a premier property in the heart of the New York financial district. As part of the acquisition, plans were approved for a 20,000 square metre expansion of the existing retail space.

In May, Westfield America announced it had formed a joint venture with JP Morgan Fleming Asset Management Inc., for one of the portfolio’s premier malls – Westfield Shoppingtown Montgomery in Bethesda, Maryland. The mall has a value of approximately US$281 million and JP Morgan acquired a 50% interest in the joint venture which will enable Westfield America to reduce debt and free up capital to finance future growth.

Department store chain Montgomery Ward which has been in Chapter 11 for some time, recently sold 250 stores across America. Of these, 7 were in Westfield Shoppingtowns. Subsequently, Westfield America recently completed the purchase of two of these stores at Westfield Shoppingtowns Plaza Bonita and Topanga in order to facilitate future redevelopments. Of the remaining five stores:

  • Target acquired the stores at Westfield Shoppingtowns Eagle Rock, Mission Valley and Wheaton, and
  • Sears acquired two stores, one at Westfield Shoppingtown Annapolis and the other at Westfield Shoppingtown Oakridge for its new concept, The Great Indoors.

Westfield Shoppingtown Redevelopments – Completed:

INDEPENDENCE, North Carolina
In May the US$55 million redevelopment, incorporating a new Dillard’s department store, 15,000 square metres of specialty shops, a food court, restaurants and a renovation of the existing centre was completed. The redevelopment opened on time and on budget with mall shops 93% leased reflecting the region’s growth since 1979 when the centre originally opened.

PARKWAY, San Diego
The US$14 million redevelopment of the community retail strip centre opened fully leased in March with added big box retailers Best Buy, Borders Books and Office Depot and served to revitalise this area of the property.

VALLEY FAIR, Northern California In March, Stage One of the US$165 million redevelopment, was opened fully leased. It featured 80 new specialty stores, a new Nordstrom department store, food court and additional parking.
The second phase of the redevelopment, which is due for completion in the first half of 2002, will position Valley Fair as the premier shopping destination in the area with a total of 270 specialty stores, including several leading retail brands such as Louis Vuitton, Christian Dior, Tiffany & Co. and Fendi, reflecting the high income trade area and the quality of the redeveloped centre.

Westfield Shoppingtown Redevelopments – Current:


ENFIELD, Connecticut
The US$11 million redevelopment plan incorporates a new 11,700 square metre Target store, a new entrance court and revised mall connection to the centre court as well as off site road improvements. The redevelopment is scheduled to be completed in the first half of 2002.

The May Company acquired the top level of the former JCPenney Store, allowing Hecht’s to relocate its Home Store and facilitate the expansion and remodeling of its existing store. At the same time Westfield America acquired the lower level of the JCPenney store, enabling the addition of 5,900 square metres of Gross Lettable Area, including a 2,300 square metre Old Navy, to enhance the Shoppingtown’s merchandise mix. The total project cost is approximately US$19 million with an estimated completion date in the second half of 2001.


The US$54 million redevelopment will include a comprehensive renovation of the existing centre together with a new Sears Department Store, two levels of new and reconfigured mall shops totalling 16,700 square metres and with a new food court. Construction is on schedule for completion in late 2002.

The US$232 million redevelopment will position the centre as a new super-regional mall of more than 110,000 square metres, including the only Nordstrom in St. Louis, flagship Lord & Taylor and Famous-Barr department stores and a renovated JCPenney. The development is expected to be completed in the second half of 2002.


PROMENADE, Los Angeles
The US$35 million redevelopment will transform the centre into an entertainment/retail centre. Upon completion in the second half of the year, the new entertainment venues are expected to establish the centre as a leading lifestyle and entertainment destination in the West San Fernando Valley.

PALM DESERT, Los Angeles
The US$30 million redevelopment, including a new Sears, expanded Macy’s and Robinsons-May, and a comprehensive renovation, will competitively reposition the centre in its market and is expected to be completed in the second half of 2002.

Financial information

At 30 June 2001 Westfield America Trust was the 4th largest property trust listed on the Australian Stock Exchange with a market capitalisation of $2.7 billion.

Total consolidated assets of the Trust were US$4.9 billion at 30 June 2001. Equity attributable to unitholders was US$1.5 billion, ($2.9 billion) up 49.6% on the previous corresponding period. There were no revaluations of centres during the period.

At 30 June 2001 net asset value per unit was $1.79, an increase of 14.2% over the value at June 2000 of $1.56.

An interim distribution of 6.75 cents per unit will be paid on 31 August 2001 to holders of units as at the record date of 16 August 2001.

Group Finance Director, Mr Stephen Johns, said the quality of the Trust’s portfolio, continuing demand for space and completion of redevelopments should lead to increased distributions to unitholders for the second half of 2001.