Chairman’s address Westfield America, Inc. annual shareholder’ meeting

29 April 1999

Countries: United States

This was an extraordinary year for Westfield America. As a result of our strategic focus on new acquisitions, Westfield strengthened its leadership position in the shopping center industry, emerging as the fourth largest regional shopping mall company.

Last year, through strategic acquisitions, the Westfield America portfolio grew from 24 to 38 regional and super regional malls, comprising nearly 36 million square feet of leasable space and including almost 5,000 retailers. These prime retail properties are located in robust and economically stable consumer markets, serving a trade area of twenty-nine and a half million people.

The year was also marked by Westfield’s continued investment in the redevelopment, expansion and remerchandising of key centers in the existing portfolio, a course carefully charted to increase performance, market penetration, profitability and shareholder value.

Our objective is to create shareholder wealth through effective operations, development and acquisition of shopping centers that fit into our “clustering” approach. To achieve this objective, Westfield is driven by a two-pronged strategy. The first is our emphasis on enhancing the performance of our existing assets through our intensive management style and culture, and through the redevelopment and expansion of our properties. We seek to provide superior management and operational excellence, and depth of management. Our intensive management style has resulted in operating statistics that are at the top of the range for mall companies. We redevelop and expand key properties within our portfolio to maximize sales productivity resulting in higher rents.

The second strategy is our approach to acquisitions. We purchase regional malls in good consumer markets that provide the potential for enhanced performance, and that can strengthen our penetration in an area. We create economies of scale through the strategic clustering of our malls.


The two years since our initial public offering, Westfield America has firmly established itself as a market leader. I am pleased to report that our 1998 and first quarter 1999 results confirm Westfield America’s vitality in the industry.

  • For the year, Funds from Operations, or FFO, were $140.8 million, representing $1.63 per share, a 6.5 percent increase on a per share basis.
  • Total revenues increased by $111.7 million, or 52%, to $328.5 million.
  • Total retail sales in our malls for the 12 months were $7.6 billion, with specialty store sales increasing 4.2 percent on a comparable square foot basis over 1997.
  • Sales per square foot for mall shops grew from $310 in 1997 to $330 in 1998, a 6.5 percent increase.
  • Last year, we signed 580 mall shop leases totaling 1.1 million square feet.


In 1998, Westfield America invested $1.8 billion in the acquisition of interests in 16 regional and super regional shopping malls, with 15.7 million square feet of prime retail space.

A critical element of this investment was the acquisition of the TrizecHahn portfolio of 12 West Coast regional and super regional shopping centers. With this acquisition, Westfield established itself as the largest owner of regional shopping malls in the state of California, and confirmed its leadership in the major markets of San Diego, Los Angeles and San Jose.

The acquisition of the TrizecHahn portfolio is a good example of Westfield’s emphasis on investing in mature markets where the assets in those markets have not yet reached their full potential. When making a strategic acquisition, we look for properties in markets that have solid fundamentals such as good average household income, strong household expenditures and high employment. The TrizecHahn portfolio met these requirements and provided Westfield America with a unique opportunity to enhance the strategic clustering of its portfolio. The other acquisitions include: Crestwood Plaza in St. Louis, Independence Mall in Wilmington, North Carolina, and in California, The Promenade at Woodland Hills and the remaining 58 percent interest we did not already own in Topanga Plaza, in Canoga Park.

Employing this “clustering” strategy has resulted in Westfield America becoming the largest owner of regional malls in San Diego, Los Angeles, St. Louis, San Jose, the state of Connecticut and the suburban Maryland/Washington, D.C. area.

Strong, multiple center markets allow Westfield to achieve significant efficiencies in operations, marketing and leasing. These market clusters enable us to offer retailers immediate market penetration that, in turn, gives them an opportunity to enhance their own position in these markets. And, these clusters provide a base on which to build the Westfield brand name.


As a direct result of our market strength and acquisition strategy, 1998 also heralded the launch of our initiative to brand our centers “Westfield Shoppingtowns”. We first introduced the Westfield Shoppingtown brand in the United States in November on network TV targeted in our key markets.

By promoting and advertising the malls under the Westfield brand name, we gain efficiencies in advertising, making our dollars work harder allowing for greater media coverage and ultimately, impact. We can afford to advertise on network TV because we are concentrating marketing spend to promote one brand.

Our competition in these markets is fragmented and because we are the largest owners of regional malls in an area, this gives us a distinct advantage over our competitors.

The Westfield brand stands for the Company’s commitment to a quality shopping experience, to exceptional customer service and to the communities we serve. Branding our malls, a first for a regional shopping center portfolio, differentiates our malls from those of our competitors, builds customer loyalty, solidifies market penetration and strengthens our sales growth potential.


Increasing productivity and profitability through redevelopment, expansion and repositioning of our centers is what Westfield is known for and a distinct Westfield strength. Central to our growth is ongoing investment in the redevelopment, expansion and remerchandising of the existing portfolio. We grow by extracting incrementally more value from our properties and expanding our assets, not just through acquisition of other portfolios.

In 1999, we plan to invest $213 million to redevelop four of our Shoppingtowns: Valley Fair, in San Jose, California; Annapolis, in Annapolis, Maryland; Mid Rivers, in St. Louis, Missouri; and, Connecticut Post, in Milford, Connecticut. This is in addition to the nearly $100 million invested in redevelopment projects begun in 1998 and currently underway or recently completed at seven of our Shoppingtowns.


Today we have announced our financial results for the first quarter ended March 31, 1999.

  • For the quarter, Funds from Operations, or FFO, were $41.2 million, representing 41 cents per share, on revenues of 125.3 million.
  • Total mall shop sales for the quarter were $667.3 million, representing an increase of 5.7% on a comparable square foot basis.
  • Mall store space, excluding the Hahn portfolio, was 93 percent leased as compared to 92% for the first quarter of 1998. The Hahn portfolio was 89 percent leased as of March 31, 1999 as compared to 87percent in July 1998, when management of the portfolio was transferred from TrizecHahn.
  • Leases totaling 398,182 square feet were signed during the quarter at rents averaging $36.83 per square foot. Additionally, the company entered into a big box lease totaling 20,469 square feet at $24.00 per square foot.
  • The debt to total market capitalization ratio was 54.3 percent.
    A dividend was declared to shareholders of record on March 31, 1999 of 36 and one quarter cents per common share. This equates to $1.45 per share on an annualized basis. The first quarter dividend is payable tomorrow, April 30, 1999.

A copy of the first quarter press release announcement will be available following the meeting.


In 1998, Westfield America continued to strengthen its regional mall portfolio through acquisition, redevelopment and brand differentiation strategies designed to build upon the vitality of that portfolio. We will maximize the performance and impact of our holdings. Our strong performance reflects our dual focus on internal and external growth and our commitment to shareholder value.

We are confident in our ability to continue this momentum and grow internally by meeting operational goals and implementing redevelopment plans.