Address by the chairman Mr Frank Lowy AC at the members’ information briefing for Westfield Trust held Friday, 28 March 2003, 11.00am at the Rydges Jamison 11 Jamison Street, Sydney
28 March 2003
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Many of you may have been here for the Westfield America Trust meeting this morning, so please excuse any repetition in some of the things that I say at this meeting.
I would like to welcome our new non-executive directors who are here today – Jillian Broadbent, Herman Huizinga, Bob Mansfield and Gary Weiss, and I will speak a little more about these appointments later in my presentation.
I welcome members of the Trust’s Compliance Committee who are here today, John Studdy and Michael Braham.
Ladies and gentlemen, 2002 marks the 20th anniversary of Westfield Trust’s listing on the Australian Stock Exchange. When it floated back in June 1982, the Trust had just six properties in Australia’s three eastern states, $128 million in assets and a stock market valuation of $130 million.
Now, 20 years later, Westfield Trust is the 19th largest entity listed on the Australia Stock Exchange, as well as being Australia’s largest listed property trust, with a market capitalisation today of $7.2 billion.
As at December 31 2002, the Trust had 41 properties in Australia and New Zealand, gross assets of $9.7 billion, more than 7,500 retailers and retail sales in excess of $9.1 billion.
nce then, we have been involved in a number of other transactions, and I will discuss those a little later in my address.
I believe Westfield Trust has been a sound long-term investment for unitholders. In fact, since June 1982 the Trust has achieved a compound annual return of 16.1% compared with the Property Index of 14.1% and the All Ordinaries Index of 13.9%.
This performance has been built on our intensive management, careful acquisition and regular investment that keep our shopping centres at the forefront of retail trends.
I remember how difficult it was establishing the Trust back in 1982.
Twenty years later, it makes me very proud to look back over the last two decades at the Trust’s performance and the solid and steady returns the Trust has delivered to you, its investors.
Ladies and gentlemen, the last twelve months has also been very busy for the Trust.
Recently we acquired Sydney Central Plaza from Coles Myer for approximately $400 million. This purchase follows Westfield Trust’s acquisition of Centrepoint in December 2001. Sydney Central Plaza is a prime property and is expected to be a great addition to the Westfield Trust portfolio.
By buying this centre, Westfield Trust now owns two neighbouring properties at the apex of the major retail precinct in the Sydney CBD with a combined investment in both centres of around $670 million.
In September 2002, the Trust entered into a joint venture with the owner of the Two Double Seven shopping centre in Newmarket, Auckland, to collectively own and redevelop our joint land holdings. Newmarket is one of Auckland’s premier retail markets and this project, when completed, is expected to rank among the top centres in New Zealand.
Westfield Trust has also recently acquired a 19.9% strategic stake in the AMP Shopping Centre Trust, which owns some of the best shopping centre assets in Australia.
Ladies and gentlemen, I am pleased to report the Trust recorded a profit after tax of $475.8 million for the year ended 31 December 2002 – that’s an 8% increase on last year.
This result represents a distribution of 23.55 cents per unit, a 2 % increase over the previous year.
This growth in distribution reflects a number of factors, including increases in existing shopping centre income, contributions from recently completed developments and acquisitions from the previous year.
Westfield Trust’s assets at December 2002, totalled $9.7 billion, up 7.8%, while total unitholders’ equity is $6.3 billion, up 8.4%.
Retail sales in Westfield Trust’s 29 Australian centres totalled $9 billion for the 12 months to 31 December 2002, an increase of more than 6% on a comparable basis, over last year. In particular, specialty sales were strong through most of the year, with sales growth increasing in every quarter of 2002. Fashion, footwear, jewellery, food, general merchandise and housewares all performed well.
This strong performance has continued into 2003 with comparable sales for January and February increasing by approximately 6%. In New Zealand, sales in Westfield Trust’s 12 centres totalled $NZ1.5 billion for the year, an increase of 3.7%, while in January and February sales were relatively flat.
Occupancy levels in all our centres continue to be in excess of 99%. While the retail performance has been solid, the Trust is also progressing steadily with its Australian and New Zealand redevelopment projects. In Australia, construction work on the $680 million Bondi Junction project is on schedule, while the leasing program, which was launched to retailers last August, is progressing very well. The project is expected to be completed in stages with the final stage opening in mid 2004.
As you can see from the model in the hotel foyer and this short video you will see in a moment, Westfield Bondi Junction will be a truly world-class centre.
Ladies and gentlemen, work also continues on our redevelopments at Fountain Gate in Melbourne, North Lakes in Brisbane and St Lukes in Auckland.
Along with these projects, the Trust has identified future developments worth around $1.6 billion, including investments at Doncaster in Melbourne, Centrepoint in Sydney’s CBD, Liverpool in Sydney and Innaloo in Perth. In New Zealand, planning is well under way for developments at Queensgate in Wellington and Riccarton in Christchurch.
I would now like to speak about the changes that have been made to our board and how this fits into the Trust’s wider corporate governance.
I foreshadowed last year our intention to adopt a board structure for Westfield Trust where the majority of directors are independent, with no connection to the trust manager, Westfield Holdings.
I would now like to formally introduce the new directors to you.
Jillian Broadbent is a member of the Reserve Bank of Australia, a director or Woodside Petroleum, Coca Cola Amatil and the Special Broadcasting Service. Jillian is a director of Westfield America Management Ltd, the responsible entity of Westfield America Trust, and also has extensive experience in the investment banking industry.
Bill Falconer is chairman of a number of companies including Hellaby Holdings Ltd, Restaurant Brands NZ Ltd, Oyster Bay Marlborough Vineyards and Westgate Transport Ltd. He is a commercial barrister and chairman of the Market Surveillance Panel of the New Zealand Stock Exchange and former chairman of St Lukes Group Ltd in New Zealand.
Herman Huizinga was a member of the Executive Board of the ING Group of the Netherlands. He serves on the board of the Dutch syndicate, Industrial Tunnel Methods and is on the board of the Eye Hospital in Rotterdam. Herman Huizinga was a member of the Executive Board of the ING Group of the Netherlands. He serves on the board of the Dutch syndicate, Industrial Tunnel Methods and is on the board of the Eye Hospital in Rotterdam.
Herman is also a director of Westfield America Management Ltd, the responsible entity of Westfield America Trust.
Bob Mansfield is the non-executive chairman of Telstra, chairman of CDS Technologies, a director of Datacraft Asia Ltd and of Dimension Data Holdings. Bob is also a director of Westfield America Management Ltd, the responsible entity of Westfield America Trust. Bob has been CEO of several major Australian corporations and has filled a number of roles for the Federal Government.
Gary Weiss is an executive director of Guinness Peat Group plc, chairman of Ariadne Australia Ltd, MEM Group Ltd and is a director of various other public companies. He has considerable international business experience.
These board members have extensive backgrounds in business and as company directors bring sound experience to the Westfield Trust board.
Corporate governance is only effective with sound management and a strong board. Having in place these factors can provide the foundation on which a business can perform and in turn, reward its investors.
Ladies and gentlemen, on the basis of current retail conditions and the underlying strength of Westfield Trust’s shopping centre assets, we expect distribution per unit to increase by approximately 3% during 2003.
I am pleased now to open the meeting to any questions that Members may have. If you do have a question please raise your hand. An attendant will bring a microphone to you and I ask that you introduce yourself by giving your name.
There being no further questions, I now close this Members’ Briefing.
Thank you for your attendance today. On behalf of the Directors, I am delighted to invite you to join the Directors and myself for light refreshments in the area outside this room.