Australian shopping centre giant Westfield may consider listing on the London or New York stock exchange after the proposed restructure of its global business.
Westfield group chief executive Peter Lowy told The Wall Street Journal in an interview on Wednesday that “we’re going to look at listing the company in New York, London or here in Australia – all of them are under consideration”.
The comments came as the group announced its full-year results for 2013 ahead of the planned split of its Australia/New Zealand and International businesses announced in December.
The firm posted profits of A$1.6bn (£834m) and funds from operations of A$1.44bn in the year to 31 December.
FFO per security was in line with forecast at 66.5c, up by 2.3% on the prior year and included the impact of asset divestments and securities buybacks completed during the year.
Distribution for the 12 months was A$1.08bn or 51c per security, an increase of 3% and also in line with forecasts. Return on contributed equity for the year was 11.8%, up from 11.4% in 2012.
The group’s net property income for the year was A$2bn, consistent with the prior year.
Adjusting for the asset divestments during 2012 and 2013, net property income increased 8%.
Management fee income for the 12 months increased by 9% to A$140m and project income increased by 5% to $204m.
For the 12 months, comparable property net operating income in the US was up 4.7%, the UK up 4.3% and Australia up 2%.
At 31 December 2013 the portfolio in the US was 94.5% leased, up 60 basis points on the prior year, with the UK at 99.3% and the Australian/NZ portfolio remaining over 99.5% leased.
In the UK, it said the strong performance of Westfield London and Stratford City continued, with combined annual sales of almost £2bn, an increase of 3.1% for the year.
Westfield Group co-chief executives Peter Lowy and Steven Lowy said: “We are pleased with the results for the year, which reflect the solid performance of the portfolio with each market showing high productivity with growth in specialty sales and comparable net operating income.
“Our focus is on creating and owning world-leading retail destinations. During the year we successfully continued the strategic repositioning of the group by divesting non-core assets, introducing further joint ventures, investing in our development activity and announcing the acquisition of the remaining 50% interest in the Westfield World Trade Center in New York.
“Our business is in a strong position in each of the markets we operate.”
Updating on development Westfield said that in the UK works have already commenced at its 12-acre Bradford site on behalf of Meyer Bergman.
Its future development pipeline for the international business of US$9bn (group share: US$4.0bn) includes landmark developments at Croydon in London – in a joint venture with Hammerson – and the expansion of Westfield London.
During the year, Westfield announced it would increase its ownership in the retail development of Westfield World Trade Center in New York, from 50% to 100%. The project is expected to open in 2015.
“We see the key trends of the expansion of luxury and high street brands, together with the integration of food, fashion and entertainment experiences, combined with the greater use of digital technology, being brought together in our existing centres and future redevelopments,” Steven Lowy said.
The group’s development activity is expected to result in earnings accretion and create significant long-term value. The target unlevered internal rates of return for the development projects is 12% to 15%.
In 2013, the group established a US$1.28bn joint venture over a portfolio of six existing malls in the US, formed a joint venture for the redevelopment of Croydon, divested seven non-core malls in the US for US$1.64bn and disposed the joint venture interests in Brazil and Karrinyup in Australia.
During the year, Westfield raised and extended $4bn of debt facilities. Westfield has total assets worth $37.2bn, a gearing ratio of 35.8%, interest cover of 3.9 times and available liquidity of $4.3bn.
Westfield’s assets under management at 31 December 2013 were $70.0bn, a $5.6bn increase from December 2012.
Details of the proposed restructure will see Westfield sell its remaining 50% interest in its Australian and New Zealand mall to the Westfield Retail Trust, which was formed in 2010, to the form Scentre Group. This group will own 47 malls in Australia and New Zealand, leaving Westfield Group with 39 centers in the US and five in the UK and Europe. Westfield’s international business will become Westfield Corporation.
The proposal is subject to the approval of both Westfield and WRT security holders.
“Westfield’s international business and its Australian/NZ business have both grown in scale and quality to the stage where they can now stand on their own. We believe that the restructure positions the new entities for better growth and thereby provides securityholders of both Westfield Development Corporation and WRT with better long-term returns,” Peter Lowy said.
The proposal has the unanimous support of the WDC board and the independent directors of WRT. Consistent with the timetable outlined in December 2013, the explanatory memorandum is expected to be available in late April 2014 ahead of the security holders meeting to consider the proposal, which is expected to be held in late May 2014.
bridget.oconnell@estatesgazette.com
