Westfield America Trust reports increased profit

28 January 1999

Countries: United States

Westfield America Trust today announced a profit of $88.1million for the year to 31 December 1998, an increase of 16.8% overthe 1997 year.

This represents 10.20 cents per unit, an increase of 10.1% overlast year and 9.6% above the original prospectus forecast for theyear of 9.31 cents per unit.

The profit, which is after allowing for US withholding tax (forwhich Australian investors receive a tax credit), was principallyderived from the trust’s investment in Westfield America, Inc. a USReal Estate Investment Trust (REIT) listed on the NYSE.

The US$ earnings were converted at an average exchange rateUS$0.7412 pursuant to pre-existing hedging arrangements (whichexpired in December 1998).

The Trust also reported an abnormal profit after tax of $49.2million resulting in total after-tax earnings of $137.3million.

The cash distribution to ordinary unitholders for the 1998 yearis 9.75 cents per unit.

Profit summary


A$ cents
per unit

% Inc*

Operating profit before tax andabnormal items




US withholding tax thereon



Operating profit after tax andbefore
abnormal items




Abnormal items after US withholdingtax



Profit after tax



Cash Distribution toUnitholders



5.3%* %
increase over
previous year

Total specialty store sales in the existing Westfield Americaportfolio for the year to December 1998 were approximately US$3.1billion which, on a comparable per square metre basis, was 4.2%over the same period last year. Specialty store space excluding theTrizecHahn portfolio was 95% leased (93% last year), and theTrizecHahn portfolio was 89% leased compared to 87% in July 1998when management of the portfolio was transferred fromTrizecHahn.

Managing Director of Westfield – US, Mr Peter Lowy, said thehighlight of the year was the acquisition of the TrizecHahnportfolio of 12 shopping centres.

“The new centres have considerably strengthened the WestfieldAmerica portfolio making it the fourth largest mall REIT in the US.The company is now the largest shopping centre owner in Californiawhere 20 centres of its 38 centres are located,” he said.

Mr Lowy said the results for the year reflected the high qualityof the shopping centres in the portfolio and the increase inearnings per unit was particularly pleasing given the effect ofraising equity in the first half of the year in advance of theTrizecHahn acquisitions which were completed in the second half ofthe year.

“The increased size of the portfolio, together with the benefitswhich will flow from the integration of the TrizecHahn portfolioand the introduction of Westfield branding in key markets, placesus in a strong position from which to achieve continued growth inthe future,” Mr Lowy said.

Since listing in July 1996, Westfield America Trust has producedexcellent investment returns as reflected in the following table,based on the ASX Accumulation Index:

Compound annual rates of return (% p.a.)
as at 31 December 1998.

1 yr

2 yrs

Since Listing*

Westfield America Trust




Property Trust Index




All Ordinaries Index




* 3 July 1996

Highlights during the year:

Property acquisitions during 1998 exceeded US$1.8 billion.

  • TrizecHahn
    During the year, Westfield America, Inc. acquired interests in 12regional and super regional shopping centres from TrizecHahn forapproximately US $1.4 billion. The 12 properties acquired, of which9 were wholly owned and 3 were partial interests, contain 1.1million square metres of leasable area.

  • 3 New Properties
    Westfield America, Inc. acquired Crestwood Plaza and The Promenadeas well as a 70 % interest in Independence Mall for approximatelyUS$200 million. These centres have a total of 222,000 square metresof leasable area.

  • Remaining Partnership Interests
    Westfield America, Inc. acquired the interests of its partners ina number of joint venture properties for approximately US$200million. These were Topanga Plaza (58%), Santa Anita Fashion Park(50%) and Capital Mall (51%).
    As a result of these acquisitions Westfield America, Inc. now ownsa portfolio of 35 regional shopping centres and three power centrescomprising 3.3 million square metres of retail space.

Capital Raisings
A number of steps took place during the year to arrange thecapital required for the acquisitions.

  • Sale of Westfield Holdings Shares
    In April, Westfield America, Inc. realised US$99.7 million from thesale of shares in Westfield Holdings Limited which it receivedfollowing the exercise of options.
  • Issue of Capital Notes
    In June, Westfield America, Inc. issued $465 million(approximately US$300 million) of subordinated Capital Notes toAustralian investors. The Capital Notes are to be repaid in 3 equalinstalments in June 2001, 2002 and 2003. Concurrently with theissue of the Capital Notes, Westfield America Trust entered into asubscription agreement with Westfield America, Inc. to purchaseapproximately US$300 million of Westfield America, Inc.’s commonstock in three equal instalments in June 2001, 2002 and 2003 usingthe proceeds from an underwritten issue of Partly Paid Units.
  • Issue of Preference Shares
    On June 30, Westfield America Trust issued 82.2 million ordinaryunits, the proceeds of which were used to subscribe for US$75million convertible preference shares issued by Westfield America,Inc. in August 1998. Westfield America, Inc. also issuedconvertible preference shares to a major REIT investor, SecurityCapital Preferred Growth Incorporated (US$75 million), andWestfield Holdings Limited (US$50 million) for a total capitalraising of US$200 million. On December 23, Westfield America Trustsubscribed for US$25 million of convertible preference sharesissued by Westfield America, Inc. as part of a total capitalraising of US$75 million.

    During the year under review three redevelopments were completedat: Annapolis Mall, (Maryland/Washington DC), Enfield Square(Enfield, Connecticut), and South Shore Mall (Bayshore, NewYork).
    Development work is currently under way at:

  • Mission Valley – West (San Diego, California) – a new powercentre comprising big box retailers and restaurants due to open inearly 1999.
  • Meriden Square, (Meriden, Connecticut) – an additional Lord& Taylor department store as well as 6,500 square metres ofspecialty stores are planned for completion in late 1999.
  • Crestwood Plaza, (St. Louis, Missouri) – an additional 2,500square metres of specialty stores will be completed in the secondhalf of 1999.
  • Eastland Center, (Los Angeles, California) – an additional2,700 square metres of leasable space is scheduled for completionin February 1999. In addition to the developments currently underway, Westfield America, Inc. has identified a number of properties(including many of the newly acquired properties) for redevelopmentwhich are expected to commence within the next five years. Theseamount to approximately US$1.3 billion and include the followingprojects which will commence in 1999:
  • Valley Fair, (San Jose, California) – a US$150 millionredevelopment including a 21,000 square metre Nordstrom departmentstore and approximately 26,000 square metres of specialty storeswhich is scheduled for completion in the second half of 2001.
  • Annapolis Mall, (Annapolis, Maryland) – a US$22 millionredevelopment incorporating a new multi-screen cinema complex andspecialty stores due for completion in 2000.
  • Mid Rivers, (St Peters, Missouri) – a US$13 millionredevelopment incorporating a new multi-screen cinema complex and5,800 square metres of leasable space.
  • Connecticut Post Mall, (Milford, Connecticut) – a US$28 millionredevelopment which will add an 18,000 square metre Searsdepartment store and 4,100 square metres of specialty stores.

Financial Information

Westfield America Trust is the third largest property trustlisted on the ASX with a market capitalisation at 31 December 1998of A$1.6 billion.
At 31 December 1998 total assets of the trust were up 91.0% overthe previous year to $7.42 billion while equity attributable tounitholders was $1.28 billion, up 27.5% from 31 December 1997. Netasset backing per unit increased by 15.6% from A$1.22 at December1997 to A$1.41 at December 1998 which reflects the furtherstrengthening of the US dollar in relation to the Australian dollarand the revaluation of 7 shopping centres.
The Westfield Group Finance Director, Mr. Stephen Johns said: “Weexpect further growth in the earnings of Westfield America Trust in1999 from the underlying shopping centre operations. In addition,we anticipate a substantial boost to unitholder distributions in1999 based on the current level of the Australian/US dollarexchange rate.”
The final distribution of 5.15 cents per unit will be paid on 26February 1999 to all ordinary unitholders as at the record date of12 February 1999. This follows the interim distribution of 4.6cents per unit paid in August 1998.