Westfield Swings to Loss
By ANDREW HARRISON
MELBOURNE -- Westfield Group reported Wednesday a net loss for the six months ended June 30 of 708 million Australian dollars (US$590 million), reversing from a net profit of A$1.29 billion a year earlier.
Sydney-based Westfield, which operates 119 shopping centers across Australia, the U.S., the U.K. and New Zealand, said revenue totaled A$2.07 billion, down 6.0% from A$2.21 billion in the same period a year earlier.
The company is weathering a downturn in the global property market, which is eroding asset values, while retail sales in the U.S., where about half its malls are located, have been declining.
Co-managing directors Peter Lowy and Steven Lowy said in a statement that the company's Australian portfolio was performing above expectations, while in the U.S., the U.K. and New Zealand "conditions were stabilizing, albeit at lower levels."
In the half, comparable shopping center net operating income for the company's portfolio grew by 3.0%, with the Australian and New Zealand portfolio growing 6.2% and the U.S. and U.K. portfolios declining a respective 0.6% and 4.1%, Westfield said.
Portfolio occupancy at June 30 was 96.2%, up 0.2% from March 31, driven by a 30 basis point improvement in the U.S. portfolio to 90.4% leased, a 70 basis point gain in its U.K. portfolio to 97.3% and continued strong occupancy in the Australian and New Zealand portfolios at more than 99.5%, the company said.
Comparable specialty retail sales at Westfield's Australian malls in the half rose by 5.1%, while contracting 0.2% in New Zealand and by 6.2% in the U.S., it said.
In the U.K., industry statistics show retail sales in London grew by 4.8% and were up 0.5% nationally, Westfield said.
First half net operational earnings, excluding property revaluations and other non-cash items -- Westfield's preferred measure of profitability -- rose 12% to A$1.04 billion from A$928 million a year before.
Credit Suisse, which had forecast underlying profit of A$939.5 million, said the market consensus was A$1.03 billion.
The company's first half result included non-cash mark to market gains on financial instruments of A$932 million and asset devaluations of A$2.9 billion, principally because of an increase in capitalization rates, the company said.
Westfield earlier this month said it would pay an interim distribution of 47 cents, down from 53.25 cents a year ago.
In the past, Westfield has paid out 100% of its earnings as distributions but said Wednesday it will set the level to 70%-75% from next August to retain about A$500 million a year of capital for future developments.
After a review of its operating environment and capital management strategy, Westfield doesn't expect to start any new major developments until after next June, it said.
Westfield currently has five projects under construction for an investment by the company of A$4.2 billion, including its Sydney City project and the Stratford development for the 2012 London Olympics.
"To date, A$1.9 billion has been spent on these projects, with the balance of A$2.3 billion to be incurred over the next three years," Peter Lowy said.
"Redevelopment remains a major component of our long-term value creation activity and we will continue to invest in the predevelopment of our high-quality opportunities in order to be in a position to commence these projects when conditions are appropriate", Steven Lowy said.
The company also reiterated its February forecast of operational earnings and distribution in the range of 94 cents to 97 cents a security for the year ending Dec. 31, compared with 106.5 cents in 2008.
Its 2009 guidance assumes no material change in economic conditions or currency exchange rates.
Its stock last traded Tuesday at A$12.45, down 4.6% in the year to date, compared with the benchmark S&P/ASX 200 index's 18% rise in the same period.
Write to Andrew Harrison at andrew.harrison@dowjones.com |
