Westfield is confident of delivering its distribution of 106.5 cents per security for the 2006 financial year.
Yesterday, Westfield chairman Frank Lowy he is confident that the group can continue to achieve high income returns and capital growth for all Westfield investors.
Westfield reported a net profit of $4.2 billion for 2005 and since the merger the value of Westfield Group’s shopping centre portfolio has grown by nearly 46% – from $36 billion to $52.5 billion.
Lowy said the growth in 2005 was driven by the acquisition of $2.8 billion of shopping centres, $3.4 billion of redevelopments and upward revaluations of $3.9 billion from the group’s existing portfolio.
When the merger proposal was first announced, the combined market capitalisation of Westfield Holdings, Westfield Trust and Westfield America Trust was $22 billion.
At December 31, 2005, the market cap of Westfield Group was $31.6 billion – a 44% increase.
The group has a portfolio of 128 shopping centres, with 22,500 retail outlets, in four countries. The group’s portfolio value is located 44% in the US; 43% in Australia and New Zealand; and 13% in the United Kingdom.
Westfield’s offshore property portfolio now represents 61% of the group’s net property income.
Lowy said the group will achieve growth in three main ways.
Firstly, through the redevelopment of existing shopping centres around the world, including the $US500 million Century City centre in Los Angeles and the San Francisco centre.
Secondly, Lowy said the group will build new centres.
“In Los Angeles, Chicago, San Francisco, London, and right here in Sydney – we are designing and building centres that are redefining the shopping centre industry. They are giving a new meaning to what centres look like, and what they offer,” Lowy said.
Thirdly, he added by acquiring centres where they can add value by improving them through redevelopment and applying Westfield’s branding and intensive management of the asset.
In Sydney, Westfield is planning a $600 million plan to transform the adjoining Centre Point, Imperial Arcade and Skygarden centres into one integrated shopping centre.
Westfield’s £1.5 billion ($A3.62 billion) White City project is scheduled for completion in 2008 to become the largest shopping centre in greater London.
"The importance of redevelopment cannot be overstated.
"With property prices being as high as they are right now, the returns from redevelopment of centres in our existing portfolio are generally far better than we can achieve through acquisitions.
"It is clear that our redevelopment pipeline will be the engine for superior growth in the current environment,” he added.
Lowy said the company is looking at retail property owner Mills Corp in the US, which last month Mills Corp said it may be forced to sell part of all of its company under a revised credit agreement with lender.
Mills Corp is facing a federal investigation.
“Before I close, I’d like to remind you that while Westfield remains focussed on growth it recognises that this must include consideration of the economic, social and environmental aspects of our business.
“The board believes that this philosophy leads to better risk management, cost savings, innovation and a performance within the business that drives shareholder returns and meets our obligations to the communities in which we operate,” Lowy concluded.
By Nelson Yap
