Westfield Group Reports Full Year Profit of $1.7 Billion
27 February 2013
Westfield Group Reports Full
Year Profit of $1.7 Billion,
up 18% on Prior Year
The Westfield Group (ASX:WDC) today announced its full year results to 31 December 2012 with AIFRS net profit of $1.72bn, up 18.3% on the prior year.
Funds from Operations (FFO) were $1.47bn representing 65.0 cents per security, up 0.3% on the prior year and in line with forecast.
Westfield Group Co-CEOs, Peter Lowy and Steven Lowy AM said: “This has been a significant year for the Group as we continued to position WDC to generate greater shareholder value.
“The performance for the year has been very good and in line with expectations.”
Earnings before Interest and Tax was $2.12bn, up 3% on the prior year. Return on Contributed Equity was 11.4% for the year.
Net property income was $2.02bn, in line with the previous year and up 7% adjusted for divestments.
Management fee income was $128m, up 12% and project income was $194m, up 31%, with these two income streams now representing approximately 22% of FFO, up from 17.5% in the prior year.
Distribution for the 12 months was $1.11bn or 49.5 cents per security, an increase of 2.3%.
“Our strategy is to develop and own superior retail destinations in major cities by integrating food, fashion, leisure and entertainment using technology to better connect retailers with consumers. We aim to operate our centres at the highest standards and efficiency to create assets that are highly productive, have strong franchise value and have the ability to attract the world’s leading retail brands.
“We actively manage our capital position with a focus on enhancing our return on contributed equity,” the Co-CEOs said.
During the year, WDC completed a number of strategic transactions including $4.1bn of divestments, $300m of acquisitions and invested $800m in development activities. WDC has to date purchased 81m securities for $774m under its on-market buyback program.
WDC’s assets under management are $64.4bn, a $2.1bn increase on the prior year.
Over $1.4bn of new projects commenced in 2012, including Westfield World Trade Center retail development in New York. The identified pipeline of development work has increased by $1bn to approximately $12bn (WDC share $5bn). This pipeline includes landmark developments at Milan and at Croydon in south London together with the expansion of Westfield London, and the redevelopments of Century City and Valley Fair in California and Miranda in Sydney.
During the year, WDC raised and extended $3.9bn of debt facilities. At 31 December 2012, WDC had total assets of $35.9bn, a gearing ratio of 32.5% and available liquidity of $6.0bn.
The Group expects to achieve FFO for the 2013 year of 66.5 cents per security. This takes into account the full year impact of the divestments completed during 2012 and is prior to the buyback of any additional WDC securities. It assumes no material change in foreign currency exchange rates.
Distribution for the 2013 year is forecast to be 51.0 cents per security, up 3% from 2012.
WDC’s on-market buyback program has been extended for 12 months.
“We have confidence in the Group’s business model and opportunities for growth. We are focussed on remaining at the forefront of our industry as we continue to improve the quality of our portfolio through our $12bn development pipeline together with acquisition opportunities in existing and new markets. We also plan to continue redeploying capital from further joint ventures and non-core asset disposals,” the Co-CEOs said.
WDC’s global portfolio comprises 105 shopping centres in 5 countries with over 22,800 retail shops, 1.1bn annual customer visits and over $40bn in annual retail sales.
For the 12 months, comparable property net operating income for the Group was up 3.3% on the prior year with the United States up 4.2%, Australia / New Zealand up 2.9% and United Kingdom up 0.4%.
“Our operating performance for the year saw continuing high levels of occupancy, growth in average rents and comparable specialty sales growth in each market.
“The United States performance in the 2nd half of the year was strong with comparable NOI up 6.0% and resulting in the performance for the year exceeding the upper end of our forecast range. A significant component of this performance was the record number of shops we opened in the United States during the year,” Steven Lowy said.
The global portfolio at 31 December 2012 was 97.8% leased, up 30 basis points on the prior year. In the United States the portfolio was 94.4% leased, up 130 basis points, the United Kingdom up 50 basis points to 99.5%, Brazil at 93.3% and the Australian / New Zealand portfolio remaining over 99.5% leased.
WDC’s global portfolio achieved specialty sales productivity of US$701 per square foot, for the 12 months to 31 December 2012, up 3.0% on the prior year. Comparable specialty retail sales were up 6.3% in the United States, up 0.5% in Australia, up 0.1% in New Zealand and up 12.8% in Brazil for the 12 month period.
“In Australia, whilst retail conditions have been subdued for most of the year the business has performed well. Sales productivity of specialty stores remains high at $9,887 per square metre and we continue to see demand for space from both domestic and international retailers.
“In the United Kingdom, the Group’s two world class centres in London attracted over 70 million customer visits during the year spending more than £1.9bn. A highlight was the outstanding performance of Stratford City and its interaction with the London 2012 Olympics demonstrating our capacity, expertise and brand to a global audience,” Steven Lowy said.
The Group continued to evolve its digital business strategy to utilise technology to better connect retailers and consumers. During the year, WDC launched WestfieldLabs, its digital business group based in San Francisco.
WestfieldLabs is focussed on utilising WDC’s global position to innovate and develop the technological platform and infrastructure necessary to converge the digital shopper with the physical world. These initiatives include implementing digital technology in our carparks, concierge and lifestyle services and efficient delivery channels for retailers.
During the year, the $1.2bn development of Westfield Sydney was completed. The centre generates the highest specialty sales productivity across WDC’s global portfolio.
The Group successfully opened the $310m redevelopment of Carindale in Brisbane, the $340m redevelopment of Fountain Gate in Melbourne, the US$180m redevelopment of UTC in San Diego and US$370m of other projects at 9 United States centres.
“The expansion of Carindale and Fountain Gate positions these centres in the top 5 of our Australian portfolio and amongst our top 10 performing centres globally,” Steven Lowy said.
WDC’s joint venture operations in Brazil opened its development at Continente Park in Florianopolis, with the centre trading in line with expectations since opening.
“We entered the Brazil market 18 months ago with an investment in an operating joint venture of 5 assets. This was our first step in a developing market, through an investment representing less than 1% of our portfolio. Our aim is to better understand the opportunities in this region and the appropriate operating structure for our investment in the longer term.”
For 2013, the Group expects to commence between $1.25bn and $1.5bn of new developments (WDC share $300m - $500m). Developments are anticipated to commence at Miranda in Sydney, Mt Gravatt in Brisbane and at Bradford in the United Kingdom, with works having commenced on the US$150m redevelopment at Garden State Plaza in New Jersey and the US$90m redevelopment at Montgomery in Maryland.
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 around 3,800 staff worldwide. The Westfield Group
has interests in and operates one of the world's largest
shopping centre portfolios with investment interests in 105
shopping centres across Australia, the United States, the
United Kingdom, New Zealand and Brazil, encompassing over
22,800 retail outlets and total assets under management of
This release contains forward-looking statements, including statements regarding future 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.