Westfield Trust increases distribution growth forecast to 4.5% for full year
12 August 2003
Westfield Trust today increased its distribution growth forecasts for the full years ended 31 December 2003 and 2004, to 4.5% in 2003 and 4.0% for 2004.
This increase in distribution growth is primarily attributed to the expected positive impact of the $1.9 billion AMP Shopping Centre Trust (ART) acquisition.
Westfield Trust also reported today a net profit after tax of $258.3 million for the half year ended 30 June 2003, an increase of 10.0% on the same period last year.
The Trust will pay a distribution of 12.22 cents per unit for the six months ended 30 June 2003, up 4.2% over the previous corresponding period.
“This strong result reflects the intensive management of Westfield Trust assets, the quality of the shopping centre portfolio, solid retail conditions and the positive impact of recent acquisitions,” said Westfield Managing Director Steven Lowy.
“We are extremely pleased at the successful completion during the period of a number of significant transactions within such a highly competitive retail property environment.”
At 30 June 2003, the Trust’s total assets were $12.4 billion, an increase of 34.8% over the position at 30 June 2002.
Unitholders’ equity attributable to members of Westfield Trust is $6.7 billion up 11.8% from 30 June 2002 with the Trust’s net asset backing increasing from $2.99 to $3.12 per unit over the 12 months.
Retail sales in Westfield Trust’s 31 Australian centres totalled $ 9.7 billion, up 4.5% for the 12 months to 30 June 2003. On a comparable basis, retail sales in our centres have increased by 5.2%. Comparable specialty store sales increased by 6.5% over the previous corresponding period.
Retail sales at Westfield’s 12 shopping centres in New Zealand increased 4.4% to NZ$1.5 billion for the 12 months to 30 June 2003. On a comparable basis, this represented an increase of 2.6% over the previous corresponding period, with specialty stores up 2.3%.
“One of the notable features of the portfolio sales results has been the particularly strong performance from shopping centres which have benefited from major capital investment made over the last few years,” Mr Lowy said.
The occupancy level of the Westfield Trust portfolio remains in excess of 99.5% of retail space. This reflects the ongoing demand for retail space in existing Westfield centres and new projects.
In March, Westfield Trust acquired Sydney Central Plaza for $401 million inclusive of transaction costs. This purchase follows Westfield Trust’s acquisition of Centrepoint in December 2001 and consolidates the Trust’s prime position within the major retail precinct of Sydney’s CBD.
“It is pleasing to note that the management initiatives to increase the income of Sydney Central Plaza, which were identified prior to the purchase, have already been implemented,” Mr Lowy said.
Following the $1.9 billion successful acquisition of ART, Westfield Management Ltd was appointed as Responsible Entity of ART on 11 August 2003. As a result, the Trust now has interests in a further eight high-quality regional shopping centres.
As part of this transaction, the Trust also sold $724 million of shopping centre properties to Centro Property Trust (ASX: CEP) – Toombul in Brisbane, Galleria in Perth and Colonnades in Adelaide which comes out of the ART portfolio. The combined profit from the sale of Toombul and Galleria was $60 million.
On 30 June 2003, Westfield Trust entered into a $320 million joint venture with the Perron Group involving two shopping centres in Victoria. Under the joint venture, Westfield Trust acquired a 50% interest in Bay City Plaza shopping centre, in Geelong, for $72 million, while the Perron Group acquired a 50% stake in Westfield Trust’s Airport West shopping centre in Melbourne’s north west for $87.7 million. The Trust’s profit from the sale of Airport West was $3.7 million.
In New Zealand, the NZ$59 million redevelopment of Westfield St Lukes was successfully completed in May, with the opening of the final stage, a Village Sky City Cinema complex. This redevelopment, which was fully leased on completion, further enhances St Lukes’ position as the pre-eminent shopping centre in New Zealand.
Work on the $30 million Homemaker Centre at Fountain Gate in Melbourne was also completed during the period. Fountain Gate is now among the largest shopping centres in Australia with annual sales in excess of $450 million.
Last week on 7 August, Westfield Trust successfully opened the first stage of its new $74 million shopping centre at North Lakes in northern Brisbane fully leased and ahead of schedule. North Lakes is in one of Brisbanes fastest-growing regions, and is forecast to attract nearly one quarter of Brisbane’s population growth over the next decade.
The $700 million redevelopment of Westfield Bondi Junction is progressing ahead of schedule and is expected to be complete in mid 2004. Demand from specialty retailers is very strong.
$1.8 billion of future projects are currently planned for the Trust with approximately $600 million of these projects due to commence in the next few years.
Additional financial information
During the period the Trust raised $337 million of new equity comprising a $200 million placement in April and $137 million through the Distribution Re-investment Plan.
The sale proceeds of the various property transactions detailed above have been utilised to repay borrowings and to terminate associated interest rate swaps at a cost of $59.9 million.
It is expected that the profit achieved on the sales will result in there being no tax deferred component for the 2003 distribution.
At 30 June 2003, the Trust’s gearing level was 37.4%. Following completion of the ART transaction in August, including the recent asset sales, the Trust’s gearing is now approximately 36%.
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Westfield Trust Interim Results as 30 June 2003 – slide presentation
Westfield Trust with gross assets of $12.4 billion is Australia’s largest listed property trust. With a current market capitalisation of $7.6 billion it represents approximately 16% of the Australian Property Trust Index.
The Trust’s property portfolio now comprises interests in 51 shopping centres in Australia and New Zealand, with 3.1 million square metres of GLA servicing more than 9,500 retailers who generate sales in excess of $14 billion.