Westfield Holdings full year profit expected to be up 36% to $230 million

06 March 2002

Countries: Australia, United States

Westfield Holdings Limited announced today that it was on trackto achieve an after-tax profit for the 2001/2002 financial year ofaround $230 million, up 36% on last year.

This would represent an increase in earnings per share ofapproximately 30% over the previous full year.

Westfield made the forecast today while releasing its half-yearlyprofit result for the six months to 31 December 2001 of $88.5million after tax, up 15.4% on the same period in the previousyear.

The profit result for the half-year does not include income fromthe Company’s interest in Rodamco North America (RNA). However,income from RNA will be included in the full year’s result.

Westfield Managing Directors, Peter and Steven Lowy, said allfacets of the business contributed to the result and that thegrowth in assets under management from $24.1 billion to $30.9billion following the recent Jacobs and RNA transactions provided astrong platform for further profit growth in the years ahead.

On completion of the transactions, Westfield Holdings’ globalshopping centre management portfolio will comprise 108 centres,with 16,600 retailers in 8.4 million square metres of retailspace.

Financial highlights of the half-year include:

  • Earnings per share are 16.10 cents, up 10.7% on the previoushalf-year. This result takes into account the $500 million ofequity issued for the RNA transaction in the six-month period butdoes not recognise any income from RNA in this half-yearperiod.
  • An interim dividend of 8.05 cents per share will be paid, up10.7% on the previous half-year. The interim dividend will be 60%franked.
  • $500 million equity issue through an underwritten institutionalplacement as part of the Company’s acquisition of a 24.2% strategicinterest in RNA.

Westfield’s global development program continued with $780 millionof projects completed during the period and a further $4.7 billionof projects under construction or in the advanced planning stages.

This represents an increase of $1 billion in the value of projectsin the development pipeline identified since the last profitannouncement made in August 2001 and does not include projectsidentified in the Jacobs and RNA portfolios (estimated at $2.8billion) the timing and scope of which will be determined upontaking over management of the centres.

Australia and New Zealand
During the half-year Westfield successfully completed tworedevelopments – the $377 million Hornsby project in Sydney and the$196 million project at Fountain Gate in Melbourne.

In November work started on a $100 million redevelopment ofWestfield Eastgardens in Sydney and plans are progressing for anumber of major redevelopments across the portfolio.

In the June half, work is expected to start on the $680 millionredevelopment of Westfield Bondi Junction, transforming theexisting three retail sites into one, integrated shopping andentertainment centre to serve the high-income and under-servedtrade area in the eastern suburbs of Sydney.

Planning is also well underway for the redevelopment of Doncasterin Melbourne, Liverpool in Sydney and Innaloo in Perth. Plans arealso being finalised for the construction of a new shopping centreat North Lakes in Brisbane. The total cost of these projects isestimated at $500 million.

In November, Westfield Trust acquired the landmark Centrepointcomplex in Sydney from AMP, bringing another quality asset underWestfield Holdings’ management. Westfield has already introducedits distinctive branding to this high-traffic location in theSydney CBD and is planning a number of improvements to the retailmix and design of the retail area of the complex.

In July the redevelopment of NZ$80million redevelopment of WestCityShoppingtown in New Zealand was completed. Construction recentlycommenced on the NZ$55 million redevelopment of the St Lukes centrein Auckland and planning is well underway for the redevelopment ofQueensgate in Wellington, expected to commence in the second halfof 2002.

United States
The US redevelopment program continued with about US$495 millionof projects currently underway, including a US$56 millionredevelopment of South County centre in St Louis, Missouri, aUS$230 million redevelopment of West County, also in St Louis, aUS$32 million redevelopment of Palm Desert in California and aUS$175 million redevelopment of Valley Fair, San Jose,California.

During the period under review the US$19 million redevelopment ofthe Montgomery centre in Maryland and the US$38 million project atthe Promenade centre in Los Angeles were completed. The US$125million redevelopment of the Oakridge centre in northernCalifornia, is expected to commence in 2002.

The acquisition by Westfield America Trust of the Jacobs and RNAcentres, announced in December 2001 and January 2002 respectively,will make the Trust the second largest mall owner in the US. Uponcompletion, the number of centres in the US portfolio will increasefrom 39 to 61.

Contracts for the Jacobs transaction have been signed today withsettlement expected to take place in the next month or so.

An RNA shareholders’ meeting to approve the joint Westfield AmericaTrust/Simon/Rouse acquisition of RNA’s assets was scheduled forFebruary 26. This meeting has been deferred following the DutchShareholders Associations’ (VEB) request to the Enterprise Chamberof the Amsterdam Court of Appeal that it make a finding ofmismanagement by RNA’s Boards.

The Court has set a hearing date of March 18 and RNA is reconveningthe EGM, subject to the consent of the Court, for March 25.Westfield remains confident that the transaction will close onschedule.

United Kingdom
During the six months to December 2001 the seven centres inWestfield’s UK portfolio continued to perform well, meeting theexpectations set at the time of purchase.

Retail sales in the UK generally have been relatively strong – upbetween 5 and 6% on a like for like basis on the previouscorresponding half-year period – and this has been reflected in thesales achieved in Westfield centres.

Occupancy levels in the centres has also improved – from 95. 3% atthe time of purchase to 98.6% in this period – following theintroduction of Westfield’s intense leasing and managementapproach.

There has also been considerable progress with pre-developmentwork. Planning applications were lodged for Castlecourt, Belfast,the Friary Centre, Guildford, and Eagle Centre, Derby with aplanning application for the Broadmarsh centre in Nottingham to belodged in the near future.