Westfield Group announces strong operational & development earnings
29 August 2007
The Westfield Group (ASX:WDC) today announced its half year results, reporting operational segment earnings for the half year ended 30 June 2007 of $844 million, up 7.4% over the same period last year (on a constant currency basis). This represents 47.27 cents per security, an increase of 5.7%.
Net profit for the six months was $1.97 billion, which includes property revaluations and mark to market adjustments.
The distribution for the six months (including income hedging) was $946 million and 53.25 cents on a per security basis, representing 50% of the estimated full year distribution.
Shopping centre assets were re-valued during the period resulting in a $1.19 billion increase, which includes $501 million of value created through development. The value increase in the balance of the portfolio was primarily driven by growth in underlying income.
Westfield Group Managing Directors, Peter Lowy and Steven Lowy, said: The key features of this result were a solid operational performance across the global portfolio; the continuing delivery of the extensive development program; the efficient use of capital; and the strengthening of the Groups balance sheet.
For the 2007 year, the Group expects to complete $1.9 billion of major development projects (Westfield Group investment – $1.4 billion) of which $270 million (Westfield Group investment – $212 million) has been completed with a weighted average development yield of approximately 10%.
Currently there are 16 major projects underway at a forecast investment of $7.2 billion, with the Groups share being $5.1 billion. This includes $1 billion of developments commenced in the first half. In addition, over the next three years, the Group is scheduled to commence in excess of $10 billion of new development projects.
Operating highlights for the half-year include:
Close to 100% occupancy in Australia, New Zealand and the United Kingdom. In the United States, the portfolio was 93.5% leased at period end.
Comparable shopping centre net operating income growth of 6.1% in Australia and New Zealand, 2.6% in the United States and 6.7% in the United Kingdom.
Strong growth in specialty retail sales in Australia and continuing growth reported in New Zealand, the United Kingdom and the United States.
Strong leasing activity with over 2,400 lease deals completed globally, representing approximately 359,000 square metres of retail space.
At the date of this announcement, the Group has raised approximately $6.0 billion in 2007 mainly from:
The issue of $1.26 billion Property Linked Notes;
The formation of a new joint venture with GIC at Westfield Parramatta in Sydney, Australia for $717.5 million;
The establishment of a 530 million wholesale fund in the United Kingdom;
The issue of $3 billion ordinary equity from a Pro-Rata Entitlement Offer.
In addition, the Group has also recently announced:
The strategic re-alignment of the United States portfolio – with the divestment of four assets in the St Louis market for US$1.04 billion and the re-investment into the growing Florida market with the acquisition of two assets for US$400 million;
The formation of a new joint venture with LaSalle Investment Management Inc. investing $738 million for a 50% share in Westfield Doncaster in Melbourne, Australia.
The Group has interests in 119 shopping centres across Australia, the United States, the United Kingdom and New Zealand with a gross value of approximately $62 billion and encompassing 22,450 retail outlets. The size and quality of the portfolio with its geographic diversity, combined with the Groups intensive management, continues to provide the foundation for sustainable income and capital growth.
“Focus will remain on the Groups development program which will enhance the Groups earnings. The Group currently has approximately $7 billion of development projects underway and in excess of $10 billion of new development projects expected to commence over the next 3 years. Given this extensive development program and the recent capital initiatives, the Group is well positioned for future growth”, Messrs Lowy said.
The distribution forecast for the 2007 year remains unchanged at 106.5 cents per security.
The Westfield Group (ASX Code: WDC) is an internally managed, vertically integrated, shopping centre group undertaking ownership, development, design, construction, funds/asset management, property management, leasing and marketing activities and employing in excess of 4,000 staff worldwide. It has investment interests in 119 shopping centres in four countries, with a total value of approximately A$62 billion and is the largest retail property group in the world by equity market capitalisation.