Lowy confirms $12 billion development pipeline at Westfield AGM

Global retail giant

Westfield has reconfirmed its 2013 forecast at its AGM today, with Chairman Frank Lowy AC telling shareholders the company’s development pipeline has increased from $1 billion to $12 billion, despite recent asset sales.

In February Westfield released its annual results for 2012, which showed a net profit of $1.72 billion, up 18.3% on the previous year.

At today’s Annual General Meeting, Mr Lowy reconfirmed the company’s Funds from Operation forecast for 2013 of 66.5 cents per security.

The distribution for the 2013 year is forecast to be 51 cents per security, up 3% from 2012.

During his address, Mr Lowy told shareholders that the trend of subdued retail sale growth is continuing in 2013 on the back of low consumer confidence.

“Despite this difficult environment, the business in Australia is performing well and productivity within the Australian portfolio remains high,” Mr Lowy said.

“At the same time, operating performance in our international markets has been encouraging - with the US market now well into a recovery phase following the global financial crisis. These results demonstrate the benefits of owning a geographically diverse portfolio.”

Mr Lowy said Westfield’s operating and financial performance remains sound, its balance sheet is strong and the prospects for future growth are ‘bright’.

“Some of our objectives are operational and reflect our strong focus on continually improving the shopping experience in our centres by introducing the best global retailers, including many luxury brands, and generally providing our shoppers with a world class experience in food, fashion, leisure and entertainment,” Mr Lowy said.

“Our evolving digital business strategy is a key element in achieving this objective.

“As regards our property portfolio, our aim is to create and maintain assets of the highest possible quality. We are continually seeking opportunities to participate in exciting retail projects such as those at World Trade Centre in New York, Milan in Italy (above) and Croydon in the south of London.

“And there are exciting new re-developments in our current portfolio such as Westfield Miranda here in Sydney and Century City and Valley Fair in California.”

Mr Lowy said Westfield has sold centres in a number of markets where those centres did not meet the company’s new return criteria.

“Sometimes it isn’t an easy decision to sell these centres because typically the sale of an asset results in earnings dilution during the period of time that it takes to redeploy the proceeds of sale,” he said.

“The issue of short term earnings dilution is something we will have to accept for as long as we continue implementing our strategy of selling assets that do not meet our performance criteria.

“We will continue to make every effort to mitigate any earnings dilution where it occurs but we must always be prepared to take a longer term view of what is best for the Company.

“We will use funds from asset sales and joint ventures to fund future investment in our portfolio including new projects in the world’s leading cities.

“It is worth noting that although we have sold and joint ventured certain assets, our development pipeline has actually increased by $1 billion to $12 billion.”

Mr Lowy said Westfield’s expected investment in that pipeline is $5 billion and the company would not be calling on our security holders to contribute new capital to fund the investment.

He told shareholder it is an exciting time for the retail industry globally.

“The constantly changing retail landscape has always been challenging, and that remains true today,” Mr Lowy said.

“The rapid pace of change in retail formats, digital technology and shopping habits make it as difficult as ever to predict the future.

“But, as we have in the past, we see change as an opportunity to improve our business and grow.

“We are at the intersection of so much that is new and exciting in global retail property.

“We interact with retailers, at all levels and in multiple markets around the world.

“This interaction has accelerated our evolution towards creating very different kinds of shopping centres from those we traditionally developed.

“Changes in the design of our centres and the mix of local and international retailers they attract, including many luxury brands, together with the increased emphasis on fine food and better casual dining are driving a new way of looking at our industry and opening up new possibilities.

“Just one of these exciting new possibilities is the way in which Westfield is developing its digital business strategy to use technology to better connect retailers and consumers and we are devoting increased resources to exploring the opportunities in this area.”

During his AGM address Mr Lowy announced the retirement of long-serving Board members Stephen Johns and Professor Fred Hilmer and the pending appointment of new Director, Mark Johnson.