Westfield trust reports 10.4% increase in full-year distribution to $525.5 million

05 February 2004

Countries: Australia

Westfield Trust (WFT) today announced a distribution to unitholders of $525.5 million for the year to 31 December 2003, an increase of 10.4% on last year.

The result represents a distribution of 24.63 cents per unit, an increase of 4.6% on last years 23.55 cents per unit and ahead of its previous forecast.

The strong performance of WFT during the year reflects the solid underlying results of WFTs shopping centre assets within a sound retail environment and the positive impact of recent acquisitions, which have further enhanced the already high quality of the portfolio, said Westfield Managing Director Steven Lowy.

As a result of WFTs acquisition and redevelopment activities as well as the continuing improvement of the existing portfolio, the total assets of WFT increased to $12.6 billion at 31 December 2003, up 29.4% from $9.7 billion last year. This represents the largest annual increase in WFTs history.

Total unitholders equity at 31 December 2003 was $7.2 billion, up 13.7% from $6.3 billion last year.

WFTs net asset backing increased by 5.8%, from $3.09 per unit at December 2002 to $3.27 per unit at December 2003, largely due to revaluations of a number of WFTs shopping centres.

Operational results

Retail sales in WFTs 32 Australian centres totalled $10.2 billion, up 5.4% for the 12 months to 31 December 2003. On a comparable basis, retail sales in our centres have increased by 5.6%. Comparable specialty store sales increased by 5.7% over the previous corresponding period.

The sales performance of WFTs retailers represents the second consecutive year of strong sales, a trend we see continuing particularly given the increased contribution from recently redeveloped centres during the past few years.

Retail sales at WFTs 11 shopping centres in New Zealand increased 3.9% to $NZ1.5 billion for the 12 months to 31 December 2003. On a comparable basis, this represented an increase of 1.9% over the previous corresponding period, with specialty stores up 3.2%.

Retailer demand for space in WFTs Australian and New Zealand shopping centre portfolio remained strong, with occupancy levels continuing to exceed 99.5% of retail space.

Property Transactions

A major feature of WFTs activities in 2003 has been the completion of a number of significant transactions which have either met or exceeded our expectations at the time of acquisition. During the period, WFT acquired interests in 12 centres totalling $2.6 billion and disposed of interests in six centres totalling $0.8 billion. The combined profit from the asset sales was $82.4 million.

In March, WFT acquired Sydney Central Plaza for $401 million. This purchase follows WFTs acquisition of Centrepoint in December 2001 and consolidates WFTs prime position within the major retail precinct of Sydneys CBD.

WFT entered into a $320 million joint venture with the Perron Group in June 2003, involving two shopping centres in Victoria. Under the joint venture, WFT acquired a 50% interest in Bay City Plaza (Geelong) for $72 million, while the Perron Group acquired a 50% stake in WFTs Airport West shopping centre (Melbournes north west) for $87.7 million. The profit from the sale of 50% of Airport West was $3.7 million.

The $1.9 billion acquisition of the AMP Shopping Centre Trust (ART) in August resulted in WFT acquiring interests in eight high-quality Australian regional shopping centres. At the same time, WFT on-sold the ART centre, Colonnades (Adelaide) and sold its Toombul (Brisbane) and Galleria (Perth) centres for $724 million reflecting a profit on sale of $64 million.

In December, WFT completed its transaction with Commonwealth Funds Management (CFM). Under this transaction WFT:

acquired CFMs 50% interest in Belconnen (Canberra) for $230 million, thereby taking WFTs interest in Belconnen to 100%;

introduced Australian Prime Property Fund (APPF) as WFTs new joint venture partner at Marion (Adelaide), after facilitating APPFs acquisition of a 50% stake in this centre from CFM for $323 million; and

sold its 50% interest in Arndale (Adelaide) for $60 million, generating a profit on sale of $14.5 million.

Investment Projects

In New Zealand, the NZ$59 million redevelopment of St Lukes (Auckland) was successfully completed in May. This further enhances St Lukes position as the pre-eminent shopping centre in New Zealand.

During the year, the $30 million Homemaker Centre at Fountain Gate (Melbourne) was also completed. Fountain Gate is now among the largest shopping centres in Australia with annual sales in excess of $480 million.

In August, WFT successfully opened the first stage of its new $89 million shopping centre at North Lakes (northern Brisbane) fully leased and ahead of schedule.

The first stage of WFTs largest project to date, the $700 million redevelopment of Bondi Junction opened in November with a new David Jones department store along with a new Woolworths supermarket and 20 specialty stores. The project is progressing well with the remaining stages expected to open from February 2004 to completion in the second half of 2004.

Demand from specialty retailers for this project remains strong and we are pleased with the quality and range of the retail and entertainment offering for the completed centre. Mr Lowy said.

Redevelopment work has recently commenced on a NZ$94 million project at Riccarton (Christchurch, NZ) and a $44 million project at The Pines (Melbourne). A further $1.7 billion of future projects are currently planned for WFT with approximately $600 million of these projects expected to start in the coming year.

Financial Transactions

During the year, WFT raised $480 million of new equity comprising a $200 million placement of ordinary units in April at a price of $3.30 per unit and $280 million through the Distribution Re-investment Plan.

In July, WFT issued $500 million of medium term notes (MTNs) into the domestic debt capital markets.

In November, WFT raised $850 million from the sale of Unsecured Notes and Call Options over WFT units. These securities were sold to Deutsche Bank who then sold exchangeable securities into the European market. This issue provided WFT with a diversified funding source into a new market at an attractive cost. The issue was also the largest public issue by an Australian entity of this type of security and the first by an Australian listed property trust in Europe.

The tax advantaged component of the 2003 distribution will be reduced to approximately 17.5% as a result of the disposal of interests in six centres during the year.

Revaluations and Gearing

During the year 19 of WFTs Australian shopping centres and 3 New Zealand shopping centres were independently valued, reflecting a revaluation surplus of $330.9 million.

At 31 December 2003, WFTs gearing level was 36.7%. Following the completion of the sale of Arndale (Adelaide) in January 2004, WFTs gearing is now approximately 36.4%.


On the basis of a continuation of current retail conditions and the underlying strength of WFTs shopping centre assets, the directors forecast that barring unforeseen circumstances, distribution per unit for the 2004 year is forecast to grow by 4%.