16 Febuary 2011

The Westfield Group (ASX:WDC) today announced its 2010 full year results with net profit of $2.306 billion (before one off accounting adjustments and charges in relation to the establishment of the Westfield Retail Trust (WRT)) compared to $(458) million in December 2009.

Including the WRT accounting adjustments and charges (due to the distribution of assets to WRT), reported statutory net profit was $1.114 billion for 2010.

WDC Chairman, Frank Lowy AC, said: “This past year has been a significant one for WDC. We completed a major restructure and distributed $7.3 billion of capital to securityholders. This, together with the additional income we will earn from property management and development, is expected to improve our return on equity and long term growth profile.”

The Group’s net profit for the year included property revaluations of $1.135 billion of which $399 million were development gains and $736 million were from the existing portfolio.

Operational segment earnings for the year were $2.063 billion representing 89.6 cents per security, in line with forecast. Distribution for the year was $1.464 billion representing 63.56 cents per security, also in line with forecast.

Development segment earnings for the year were $227 million or 9.9 cents per security.

Over the period, the average Australian dollar exchange rate appreciated by some 15% and 17% compared to the US dollar and British Pound, respectively. Due to the impact of these exchange movements, operational segment earnings were 1.5% lower than the 2009 result but were up 1.4%, on a currency adjusted basis.

At December 31, the Group had assets under management of $58.2 billion, balance sheet total assets of $37.2 billion, a gearing ratio of 38.4% and has available liquidity of $4.2 billion.

Operating Performance

“Throughout the year, we have seen the improving performances continue from both our United States and United Kingdom businesses. In the Australian / New Zealand portfolio, the business remains strong with solid demand for space, excellent sales productivity and continued rental growth”, WDC Managing Director, Steven Lowy AM said.

For the year, net property income, in local currency terms, was up 4.1% in Australia / New Zealand, down 1.1% in the United States and up 13.2% in the United Kingdom. The United Kingdom result was driven by the strong performance from Westfield London, Europe’s largest urban shopping centre.

The portfolio at 31 December 2010 was 97.7% leased, with the United States portfolio at 94.1% leased; and the Australian / New Zealand and United Kingdom portfolios at, or over, 99.5% leased.

For 2010, comparable specialty retail sales per square foot in the United States grew by 6.1%. In Australia comparable specialty retail sales declined slightly, by 0.4%, and in New Zealand grew by 0.4%.

Westfield London, in its second year of operation, continued to perform exceptionally well with total sales in 2010 of 870 million, up 24.7% and up 18.8% on a comparable basis.

“We are extremely pleased with the performance of Westfield London and its strong growth year on year since opening just over two years ago. Demand for space continues to be strong and we are now planning Westfield London’s next stage of development and expansion”, Steven Lowy said.

Development Activity

Currently, WDC projects under construction have a total forecast investment of $4.2 billion of which WDC’s spend in completing these projects over the next 18 months is approximately $900 million.

Excellent construction and leasing progress continues on the 1.45 billion project at Stratford, adjacent to the site of the London 2012 Olympics and we remain on schedule for a September opening this year.

During the year, WDC agreed to sell a 50% interest in the retail component of Stratford City for 871.5 million. This is expected to result in total development profits of 300 million.

The first stage of the $1.2 billion Westfield Sydney project was opened successfully in October. Leasing is well advanced on the remainder of the project, which is expected to complete in early 2012. The total development profit is expected to be approximately $780 million.

“We are very pleased with the progress at both Sydney and Stratford. During the year, we introduced joint venture partners at both projects allowing the Group to achieve significant development gains as well as releasing invested capital for deployment in our future development activity”, Steven Lowy said.

In 2010, WDC commenced work on $1.05 billion of new projects including the $350 million new office tower at Westfield Sydney, a $125 million redevelopment at Belconnen in the ACT and a $300 million expansion at Carindale in Queensland.

WDC has identified $10 billion of future development work and forecasts to commence between $750 million – $1 billion of new developments in 2011.

“These projects are expected to generate consistent development gains over time with target unlevered internal rates of return of between 12% to 15% on our invested capital. We will also generate development, design and construction income from the development activity we undertake on behalf of our joint venture partners”, WDC Managing Director Peter Lowy said.


WDC’s position is underpinned by the high quality portfolio of 119 shopping centres across Australia, the United States, the United Kingdom and New Zealand, delivering resilient cashflow and benefitting from the sustained investment in the portfolio through redevelopment activity over recent years.

“The Group’s restructure provides the platform for enhanced long term growth and we continue to focus on initiatives to improve return on equity. These initiatives include investment in our more productive assets, the introduction of new joint venture capital and the expansion of our business globally”, Peter Lowy said.

For 2011, comparable net operating income is forecast to grow in the range of:

  • 2.5% – 3.5% for the United States;
  • 7% – 8% for the United Kingdom; and
  • 3% – 4% for Australia / New Zealand.

WDC reconfirms its operational segment earnings forecast of 74.6 cents per security and distribution of 48.4 cents per security for 2011.

In 2011, WDC will also report earnings comprising Funds From Operations (FFO), based on global industry practice, together with gains from development activity. For 2011, FFO is forecast to be in the range of 64 cents to 65 cents per security, not including gains from development activity.

The forecasts assume no material change to the assumptions contained in the Explanatory Memorandum regarding the Establishment of Westfield Retail Trust, dated 3 November, 2010.


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 over 4,000 staff worldwide. The Westfield Group has interests in and operates one of the world’s largest shopping centre portfolios with investment interests in 119 shopping centres across Australia, the United States, the United Kingdom and New Zealand, encompassing around 24,000 retail outlets and total assets under management in excess of A$58 billion.

This release contains forward-looking statements, including statements regardingfuture 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.