Westfield Trust reports solid distribution growth
01 August 2000
Westfield Trust, Australia’s largest listed property trust, today announced a distribution to unit holders of $184.3 million for the six months to 30 June 2000, an increase of 15.4% over the previous corresponding period.
This represents a distribution of 10.97 cents per unit, up 3.1% on last year, with 57.2% of the distribution tax advantaged.
Westfield Managing Director Steven Lowy said: “This is a very pleasing result that reflects the strength of the Trust’s shopping centres which continue to have occupancy rates in excess of 99% of retail space.”
The assets of Westfield Trust totalled $7.95 billion at 30 June 2000, up 34.5% from the total at 30 June 1999. Unit holders’ equity attributable to members of Westfield Trust is $4.96 billion, up 26.5% over the year. The Trust’s net asset backing increased from $2.60 to $2.77 per unit over the 12 month period.
Five Australian centres were revalued during the first half of 2000, resulting in a $61.3 million increment to the asset revaluation reserve. The centres were Southland, Airport West and Doncaster (Melbourne), Belconnen (ACT) and Figtree (NSW).
Retail sales across the Westfield Trust shopping centre portfolio in Australia totalled $7.35 billion, up 14.8% for the 12 months to 30 June 2000. On a comparable basis, retail sales increased by 3.6% with department stores up 9.3% and specialty stores up 3.4% for the year. These results include stronger than usual June sales, recorded prior to the introduction of the GST, primarily in department stores and clothing and footwear specialty stores.
The Trust’s ongoing redevelopment program, which ensures Westfield shopping centres keep pace with the changing work, social and cultural patterns of the communities they serve, continues to make excellent progress.
“Importantly for Westfield Trust’s unit holders,” Mr Lowy said, “the substantial investment made to redevelop the shopping centres is designed to enhance the total return from these centres over the medium to long term. At the same time, the Trust seeks to achieve an initial yield from the projects that is greater than the cost of capital for the Trust, leading to distribution growth.”
Westfield Trust has recorded strong total investment returns over the short, medium and long term as shown in the table below.
Compound annual rates of return (%pa) as at 30 June 2000 1 Year 3 Years 5 Years 10 Years 18 Years (Since listing) Westfield Trust 13.7 13.4 13.6 15.0 16.9 ASX Property Trust Index 12.1 8.7 11.4 11.4 14.0 ASX All Ordinaries 13.7 10.1 14.3 12.4 16.0 Source: ASX/S&P Index Services
It has been a particularly active six months for the Trust’s Australian redevelopment program, with two projects completed (Chatswood and Southland), two nearing completion (Burwood and Chermside) and two commenced (Fountain Gate and Hornsby).
The May opening of a Hoyts Cinemax at Westfield Chatswood in Sydney the final stage of a $205 million redevelopment project was a great success. The redevelopment combines the best of a CBD centre with the convenience of a suburban development and offers a much broader, more exciting and comprehensive experience for shoppers on Sydney’s North Shore.
The $310 million redevelopment and repositioning of Westfield Southland in Melbourne, which is jointly owned by Westfield Trust and AMP, was also launched in May. The centre achieved $46.9 million in sales in June, an increase of 82% on June 1999 turnover and we expect sales for the first full year to exceed $525 million. This would put Westfield Southland in the top five highest grossing shopping centres in Australia.
Westfield Carousel in Perth, a $210 million project that was completed in December 1999, has also performed well during the six-month period and is well placed to exceed $300 million in sales for its first year of trading.
A feature of these redevelopment projects has been the introduction of greatly improved entertainment and leisure precincts that have proved an excellent driver of customer traffic. These precincts are called The Street at Westfield Carousel and Southland and their success has led to the introduction of The Street concept into the next wave of Australian redevelopment projects – Burwood and Hornsby in Sydney, Fountain Gate in Melbourne and Chermside in Brisbane.
The new $300 million Westfield Burwood will open later this month. It is the first Westfield shopping centre to be totally demolished and rebuilt, a decision that will ensure the local community is offered a premium shopping and entertainment experience. The new Westfield Burwood will be twice the size of the original centre and feature five major stores – Grace Bros, Target, Kmart, Coles and Woolworths – more than 200 specialty stores, The Street precinct with a Greater Union 12 screen cinema complex and more than 3,000 car parking spaces.
A number of stages of the $235 million redevelopment of Westfield Chermside in Brisbane, including a new mall anchored by Target and Kmart as well as a Bi-Lo Mega Frrresh, opened during the six month period and are performing well. The remainder of the project, featuring The Street with a Birch Carroll & Coyle 16 cinema Megaplex, is due to be completed before the end of the year.
Work has started on the next projects in Westfield Trust’s Australian redevelopment program – Westfield Fountain Gate in Melbourne and Hornsby in Sydney.
Fountain Gate is located in the fastest growing municipality in Victoria and its $190 million redevelopment will be the centrepiece of a broader Town Centre that will also feature an aquatic centre and other retail, leisure and commercial facilities.
The $350 million redevelopment of Westfield Hornsby will provide the local community with one of the most modern and comprehensive shopping and entertainment environments in Australia.
Like Burwood, the Hornsby centre was demolished and is being totally rebuilt and combined with an extension and full refit of the adjacent Northgate centre. On completion, Hornsby will be one of only four shopping centres in NSW with both David Jones and Grace Bros. In addition, the centre will have a refurbished Kmart, a new Target and expanded Coles and Woolworths. The number of specialty stores will increase from 163 to more than 300. The Street precinct, with a 10 screen Greater Union cinema complex, will encompass the town square to offer a unique shopping experience on Sydney’s North Shore.
Planning for the redevelopment of Westfield Bondi Junction in Sydney, a joint venture with AMP, is well under way and work is expected to start next year.
In New Zealand, St Lukes Group unit holders and convertible note holders will meet next week to vote on a proposal to amalgamate the shopping centre interests of Westfield Trust and St Lukes Group.
“The proposed amalgamation is a positive step for Westfield Trust unit holders because it is expected to be accretive to income distributions and result in greater geographical diversification for the Trust’s high quality shopping centre portfolio,” Mr Lowy said.
A NZ$1 billion development program includes major works already underway at Glenfield (NZ$100 million) and WestCity (NZ$80 million) malls. The redeveloped Glenfield and the first stage of the WestCity redevelopment are due to open before the end of the year.
Mr Lowy said Westfield Trust shopping centres have a strong position in their respective markets and, barring unforeseen circumstances, it is expected that distributions to unit holders will continue to grow this year.