WESTFIELD GROUP REPORTS 1st QUARTER UPDATE – CONTINUED SOLID PERFORMANCE ACROSS ALL REGIONS
16 May 2012
The Westfield Group (ASX:WDC) today announced its 1st quarter update for the three months to 31 March 2012 with continued solid performance across the Group’s global operations.
The Group has announced a number of strategic transactions that have resulted in $4.8bn of proceeds to the Group, including:
- The US$4.8bn joint venture over 12 assets in the United States with Canadian Pension Plan Investment Board, resulting in US$2.1bn of proceeds to the Group;
- The divestment of 8 non-core assets in the United States for US$1.154bn;
- The disposal of 3 non-core assets in the United Kingdom for 159m; and
- The successful completion of the Westfield Sydney project and receipt from Westfield Retail Trust of $1.4bn.
Westfield Group Co-CEOs, Peter Lowy and Steven Lowy AM said: “The first quarter of this year has been pleasing with the Group’s operations performing in line with expectations. Importantly, we announced a number of strategic initiatives that we expect will enhance the Group’s return on contributed equity and long term earnings growth profile.”
The Group’s forecast Funds from Operations (FFO) per security is 65 cents for 2012. This forecast includes the previously advised earnings impact of the announced transactions. This forecast is prior to the redeployment of capital or any further buyback of WDC securities.
Group gearing, on a pro forma basis for the transactions executed to date, has reduced to 32.0%.
WDC’s distribution forecast for the 2012 year is unchanged at 49.5 cents per security.
The portfolio at 31 March 2012 was 97.2% leased, with the United States portfolio at 91.6%, the United Kingdom at over 99% and the Australian / New Zealand portfolio remaining over 99.5%.
“Our operating performance for the 1st quarter this year saw continuing high levels of occupancy, growth in average rents and comparable specialty sales growth in each of our regions. The level of bad debts and arrears across the Group for the quarter also remain very low and in line with previous years,” Steven Lowy said.
In the United States, comparable specialty retail sales for the 12 months to March 2012 were US$465 per square foot up 8.2%, with sales in the March quarter up 10.1%.
Average specialty rent grew by 4.1% for the year to March 2012, with growth over expiring rents for all deals in the quarter up 19%.
The United States comparable NOI growth forecast for the 2012 year remains in the range of 2% to 3%.
Australia / New Zealand:
In Australia, comparable specialty retail sales for the 12 months were up 1.2% and up 1.1% for the quarter.
“The productivity of our Australian Portfolio continues to be high with specialty sales of approximately $9,800 a square metre, near full occupancy and good demand for space in both existing centres and new developments such as Fountain Gate in Victoria and Carindale in Queensland.”
In New Zealand, comparable specialty retail sales continue to improve and were up 2.2% for both the 12 months and the March quarter.
Average specialty rent for the Australian / New Zealand portfolio grew by 3.1% from March 2011.
The Australian / New Zealand portfolio comparable NOI growth forecast for 2012 remains unchanged in the range of 2.5% to 3.0%.
At Westfield London, sales for the 12 months to March were 968m, up 7.1% and up 2.2% for the quarter.
Strong performance also continues at Stratford which has achieved sales of close to 500m since opening in September 2011, well ahead of forecast. To date, 23 million customers have visited the centre, representing an average of 800,000 customer visits per week.
“This year our two world class centres in London are together expected to attract around 50-60 million customer visits spending some 2bn,” Steven Lowy said.
In Brazil, progress continues to be made on the integration of our new joint venture, Westfield Almeida Junior, which was formed in August 2011. The joint venture is on track to complete the development of Continente Park in Florianopolis later this year.
Good progress continues on our major projects underway at UTC (San Diego), Carindale (Queensland) – with Stage 1 of this project opened in March fully leased and ahead of schedule and Fountain Gate (Victoria) – with Stage 1 of this project also fully leased and opening tomorrow.
Currently, the Group has $1.2bn of projects under construction, with WDC’s share being $800m. WDC’s cost to complete these projects is approximately $300m.
The Group expects to commence between $1.25bn and $1.5bn (WDC share between $500m and $700m) of new developments in both 2012 and 2013.
The Westfield Group (ASX Code: WDC) is an internally managed, vertically integrated, shopping centre group undertaking ownership, development, design, construction, funds/asset management, property management, leasing and marketing activities and employing approximately 4,000 staff worldwide. The Westfield Group has interests in and operates one of the worlds largest shopping centre portfolios with investment interests in 110 shopping centres across Australia, the United States, the United Kingdom, New Zealand and Brazil, encompassing approximately 23,500 retail outlets and total assets under management of A$60bn.
This release contains forward-looking statements, including statements regarding future earnings and distributions. These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this release. You should not place undue reliance on these forward-looking statements. These forward-looking statements are based on information available to us as of the date of this presentation. Except as required by law or regulation (including the ASX Listing Rules) we undertake no obligation to update these forward-looking statements.