The Westfield Group (ASX: WDC) has released its update of operational performance for the third quarter ended 30 September 2005. Managing directors Peter Lowy and Steven Lowy said that the shopping center operations continued to perform well with solid specialty store rental growth and high occupancy achieved in all markets during the quarter.
In addition, the Group remains focused on creating significant value through its development program with a total of 19 projects currently under construction at a forecast cost of A$6.9 billion with Westfield's share at A$4.6 billion.
These projects continue to allow the Group to generate above average net operating income growth as well as provide strong capital appreciation.
Currently, the Westfield Group has interests in 130 shopping centers in the United States, Australia, the United Kingdom and New Zealand with a value of approximately A$48.0 billion. The centers accommodate approximately 21,600 retailers and comprise approximately 10.6 million m² of retail space.
Highlights for the quarter include:
Completed two developments Innaloo in Perth (A$60 million) and Mt Druitt in Sydney (A$65 million) on yields of 10.5% and 9.0% respectively. Since the close of the quarter, a new A$180 million centre at Helensvale in Queensland has opened with a yield of 11.6% achieved. All of these projects have opened fully leased.
Replenished the development program with the commencement of four new projects at a forecast cost of A$350 million Chermside in Brisbane, Chartwell in New Zealand, Brandon in Florida and Capital in Washington.
Strong leasing demand for both existing centres and new projects.
Solid specialty store rental growth achieved in all markets.
Almost full occupancy maintained in Australia, New Zealand and the United Kingdom portfolios. In the United States the portfolio was 93.8% leased at 30 September 2005 which is 80 basis-points ahead of the same time last year.
Retail sales continuing to show strong signs in the United States, with moderate growth in the Australian and New Zealand markets and the United Kingdom slightly negative for the quarter.
During the quarter the Group also undertook the following transactions:
- Completed the acquisition and commenced management of three new shopping centers Penrith (WDC share: 50%) in Sydney and Woden (WDC share: 50%) in Canberra for A$650 million; and Sunrise Mall in Long Island, New York for US$143 million;
- Sold an investment in General Property Trust (ASX:GPT) for A$518 million (book value at 30 June 2005 - A$481 million);
- Received US$17.5 million in lieu of not exercising an option to acquire 10% interest in Suria KLCC (Malaysia);
- Acquired five Mervyn's stores for redevelopment in the United States for US$46.5 million (Capital, Horton Plaza, Plaza Bonita, Vancouver and Southcenter).
The high quality of the Group's shopping center portfolio continues to support the underlying strength and stability of the Group's earnings with the ongoing development activities further strengthening the platform for future income and capital growth.