Westfield half-year profit up 21.3% – prospects for future growth remain strong

17 February 1999

Countries: Australia

Westfield Holdings Limited today announced an after-tax profit for the six months to 31 December 1998 of $57.1 million, up 21.3% on the same period last year.

An interim dividend of 5.59 cents will be paid, compared with 4.80 for the same period last year. The interim dividend continues to be 60% franked.

All areas of Westfield’s shopping centre business contributed to the result against a background of solid retail sales and low inflation in Australia and the United States, intense management of the centres which maximises income growth and a major redevelopment program in both countries which has identified projects due to commence over the next four to five years.

The highlights of the period under review included:

  • the completion in the U.S. of Westfield America, Inc.’s acquisition of 12 centres from TrizecHahn and the successful integration of those centres into the Group’s management portfolio;
  • the introduction of the “Westfield Shoppingtown” branding formula to U.S. centres;
  • an increased presence in the New Zealand market resulting from Westfield Trust’s purchase of a 46.6% interest in the St Lukes Group; and
  • the continuing underlying strength of the business with very strong demand from retailers for both existing shopping centre space and the new space being created through the Group’s development program.

In Australia, four redevelopments valued at $150 million were completed in the six months to December – Westfield Shoppingtowns Indooroopilly and Strathpine in Brisbane; Belconnen in Canberra and the major stage of Airport West in Melbourne. The $285 million Southland redevelopment also continued during the period.

During the half-year construction began on three further redevelopments valued at $600 million – Westfield Shoppingtowns Chatswood in Sydney, Carousel in Perth and Chermside in Brisbane.

In addition, in January 1999 work began on a new centre in Sydney on the site of Westfield Shoppingtown Burwood which was built in 1966.

Three more major projects are currently in advanced stages of planning – the total redevelopment of Westfield Shoppingtowns Bondi Junction and Hornsby in Sydney, and Fountain Gate in Melbourne.

In the United States, a number of important acquisitions and redevelopment works took place in the period.

Westfield America, Inc. completed the acquisition of 12 shopping centres from TrizecHahn, making it the 4th largest regional mall Real Estate Investment Trust in the U.S. with 38 properties.

Seven of the 12 TrizecHahn properties have already been earmarked for redevelopment to substantially enhance their local market penetration. These projects are part of a major US$1.3 billion (A$2.12 billion) redevelopment program for the Westfield America portfolio. The program includes major redevelopments at Valley Fair (San Jose, California); West County Center; Topanga Plaza (Los Angeles, California) and Wheaton Plaza (Wheaton, Maryland).

Three smaller redevelopments were completed at Annapolis Mall (Annapolis, Maryland); Enfield Square (Enfield, Connecticut) and South Shore Mall (Bay Shore, New York) during the half-year.

Four projects are currently underway – Mission Valley-West (San Deigo, California); Meriden Square (Meriden, Connecticut); Crestwood Plaza (St. Louis, Missouri) and the Eastland Center (Los Angeles, California).

Westfield Holdings Managing Director David Lowy said Westfield had begun to brand its U.S. centres using the “Westfield Shoppingtown” formula which had proven so successful in Australia over the past 30 years.

“We are confident that this will provide our centres with a competitive advantage,” Mr Lowy said. “It will allow us to create a franchise in those markets where Westfield enjoys a major presence such as San Diego and Los Angeles in California, St. Louis in Missouri, Connecticut and Washington DC.”

Mr Lowy said Westfield’s continuing strong performance reflected the momentum in the underlying business and the core competencies of the Group which will enable Westfield to capitalise on the significant growth opportunities in Australia, New Zealand and the U.S.

The half-year profit exceeded the 20% profit growth foreshadowed at the 1998 Annual General Meeting and Directors expect this performance to be continued in the second half.