Gap widening between Aussie and overseas retail rents: Westfield
Half-year results released by Westfield reveal a widening gap between the rents it charges specialty tenants in Australia versus those charged in the UK and US.
Rents charged speciality tenants in Australian and New Zealand have grown by 4.3% over the six months of the year to $1,444 per square metres.
In comparison rents charged tenants in the US are up 2.7% in the to about $650 per square metres while in the UK rents have fallen by 3.6% to about $1,260 per square metre.
Westfield shopping centre performance
| Occupancy | Speciality rents per square metre | Increase in six months to June 30 2011 | Speciality sales growth |
Australia and NZ | 99.5% | $1,444 | 4.3% | 1.8% (Aus) 1% (Nz) |
UK | 98.5% | $1,260 | -3.6% | 20% |
US | 92% | $650 | 2.7% | 6% |
Group | 96.7% |
| 3.2% |
|
Source: Westfield half-year results June 2011
The increase in rents in Australia was not matched by a rise in speciality sales.
Sales over the six-month period increased by just 1.8% in Australia and 1% in NZ compared with a 20% increase in sales in the UK and a 6% increase in the UK.
In its submission to the productivity commission earlier this year Westfield defended the high rents it charges as fair given the amount of people who visit their centres.
The high rents do not appear to be discouraging tenants in Westfield stores in Australia and New Zealand, with more than 1,500 deals completed over the six-month period representing about 200,000 square metres of space.
Westfield’s 44 shopping centres in Australian and New Zealand also have the highest occupancy rate (99.5%).
For the year to June net profit of $650 million was recorded, in line expectations.
Westfield Group CEOs Peter Lowy and Steven Lowy say the results are consistent with full-year earnings and distribution forecasts and demonstrate the resilience of the business and the continuing improvement of the operating platform.