Westfield Holdings first half result points to 13% profit increase for the 2004 financial yeat to $327 million

26 February 2004

Countries: Australia

Westfield Holdings Limited (ASX:WSF) today announced that it expects to achieve an after tax profit for the 2004 financial year of around $327 million, an increase of approximately 13% on last year.

Westfield made this full year forecast today when releasing its half-yearly profit result for the six months to 31 December 2003, which included:

Trading revenue of $667 million, an increase of 23.0% on the previous corresponding period;

An after tax profit of $173 million, up 28.0% on the previous corresponding period;

Earnings per share of 30.68 cents, up 27.6% on the same period last year; and

An interim dividend of 15.34 cents per share, up 27.6% on the previous period which will be 50% franked.

Westfield manages 116 shopping centres comprising 17,900 retail outlets and over 9.0 million square metres of retail space. The value of shopping centre assets under management is currently $32.0 billion.

Westfield now has a future development pipeline of $7.0 billion, the largest in the companys history, with $1.3 billion of projects added since June 2003. Of the $7.0 billion pipeline, $1.9 billion of projects are currently under construction and $5.1 billion of projects are expected to commence in the next five years. The company continues to work on additional projects valued in excess of $5 billion.

Westfield Managing Directors Peter Lowy and Steven Lowy said all parts of the business are performing well with the last six months seeing increases in both the management portfolio and development program. The company has been concentrating its efforts on expanding the development program globally, following the major expansion of the portfolio in recent years. This $7.0 billion development program is expected to provide the basis for growth in assets under management and profit over the coming years.

The 2004 financial year forecast represents:-

Business income of around $245 million, an increase of 21% over the prior year;

Earnings per share of around 57.8 cents, an increase of around 13% on the previous corresponding period; and

Return on equity of 20.0% compared with 19.5% for the previous corresponding period.

The company continued to expand its global business over the period. Highlights include:

Completion of Westfield Trusts (ASX:WFT) $1.9 billion acquisition of AMP Shopping Centre Trust (ASX:ART) resulting in WFT acquiring an interest in an additional eight properties;

The addition of six new shopping centres to Westfields management portfolio at Mt Gravatt (Australia), Kotara (Australia), Northbridge (USA), Sarasota Square (USA), Louis Joliet (USA), and following development completion during the period, North Lakes (Australia);

The completion of $400 million of development projects including Oakridge (USA), Capital Mall (USA), North Lakes (Australia) and Whitford City (Australia); and

The commencement of $750 million of development projects including San Francisco Centre (USA), Parkway (USA), Riccarton (New Zealand), and The Pines (Australia).

Australia and New Zealand

During the half-year, Westfield completed the new $74 million North Lakes shopping centre in Brisbane and the $72 million Whitford City project in Perth. The $700 million Bondi Junction project in Sydney continues on schedule for completion in mid 2004, with the first stage opening successfully in November 2003.

Currently, there is $890 million of projects under construction in Australia and New Zealand with work commencing during the six month period at The Pines in Melbourne ($44 million) and Riccarton in Christchurch (NZ$94 million).

A further $1.9 billion of future projects are planned in Australia and New Zealand with work well advanced for new projects including Doncaster (Melbourne), Centrepoint (Sydneys CBD), Liverpool (Sydney), Tuggerah (NSW Central Coast), Innaloo (Perth), Mt Gravatt (Brisbane) and Queensgate (Wellington).

During the period WFT completed the $1.9 billion acquisition of ART resulting in WFT acquiring interests in eight additional centres including Mt Gravatt (Brisbane) and Kotara (Newcastle) which are now being managed by Westfield. In addition WFT completed a transaction with Commonwealth Funds Management which resulted in WFT increasing its ownership of Belconnen (Canberra) to 100%, a centre with significant expansion potential.

The Australian and New Zealand portfolios have maintained occupancy levels in excess of 99.5%. Retail sales continue to be strong with comparable specialty store sales for 2003 increasing by 5.7% in Australia and 3.2% in New Zealand over the previous year.

Westfield currently manages 44 properties in Australia and New Zealand with a value of $15.2 billion, comprising 2.6 million square metres of retail space and 8,000 retailers.

United Kingdom

The Westfield UK portfolio continued to perform well over the six months to 31 December 2003, with occupancy levels in excess of 99%. Retail sales in the UK for the 2003 year increased by approximately 2% on a like-for-like basis over 2002.

Net operating incomes for the seven Westfield UK centres have, in each year, either met or exceeded expectations at the time of their acquisition in 2000.

Progress continues to be made on the 780 million development program. Significant progress has been made on predevelopment works at Derby, with construction on the 200 million project expected to commence in the second half of this year. Work is also progressing on the funding structure for the UK portfolio.

Westfield manages seven properties in the UK with a value of 800 million, comprising 700 retailers and 250,000 square metres of retail space.

United States

During the half year, Westfield completed the US$141 million Oakridge project (California) and the US$12 million Capital Mall project (Washington).

Currently, there is US$770 million of projects under construction with work commencing during the six month period at the San Francisco Centre in downtown San Francisco, California (US$410 million), Parkway in San Diego, California (US$26 million) and Gateway in Lincoln, Nebraska (US$11 million).

Work continues at Franklin Park in Ohio (US$113 million), Wheaton in Maryland (US$111 million) and Santa Anita in Los Angeles, California (US$98 million).

A further US$1.1 billion of future projects are planned in the US with work expected to commence soon at Century City and Topanga in Los Angeles, California and Connecticut Post in Connecticut. A total of 12 projects will be underway during calendar year 2004, the largest number of projects Westfield has undertaken in the US at any one time.

During the period Westfield added three new properties worth US$485 million to its US portfolio. Sarasota Square in Florida added a fifth centre to the Tampa cluster, North Bridge in downtown Chicago and Louis Joliet has brought to six the number of centres in the Chicago cluster.

The US portfolio has maintained an occupancy level of 94% at 31 December 2003. US retail sales continue to improve with nine consecutive months of comparable sales increases to December 2003. Comparable specialty store sales per square foot for 2003 increased by 1.8% over 2002.

Westfield now manages 65 shopping centres in the US with a value of US$11.3 billion, comprising 6.2 million square metres of retail space and 9,200 retailers.

Progress was also made during the period in expanding Westfields US airport management and development business. Two new airport management and development concessions were recently awarded to Westfield at Delta Airlines new terminal A at Boston Logan International Airport (Massachusetts) and at American Airlines new terminal at JFK International Airport (New York). Westfield is a leading manager and developer of US airport retail concessions with nine concessions totalling almost 400,000 square feet at Washington DC, Houston, San Antonio, Orlando, Newark, New York and Boston.

Funds management

During the six month period, Westfields funds management business continued to perform strongly with both Westfield Trust and Westfield America Trust achieving solid distribution growth.

Westfield Trust – Australias largest listed property trust – reported a net profit of $564 million for the year to 31 December 2003, an increase of 18.6% on the prior year. This represented a 4.6% increase in distribution per unit, which was above forecast. Westfield Trust has forecast a 4.0% increase in distribution per unit for the year to December 2004.

Westfield America Trust – Australias second-largest property trust – reported a net profit of $597 million for the year to 31 December 2003, an increase of 37.9% on the prior year. This represented a 5.3% increase in distributions per unit.