Westfield profits up 37%, with solid rental growth

Shopping centre group Westfield Group has reported net profits of $1.53 billion on the back of strong speciality store sales, a record volume of leasing activity and growth in property income.

The 2011 result to December 31, 2011 was driven by net property income increasing 7% during the year to $2.06 billion, a 100% increase in the group’s property management income to $114 million and a 92% increase in project income.

Net profits were up 37% on 2010 profits of $1.12 billion. 

Property income in local currency terms was up 8% in Australian and New Zealand stores, up 1% in the United States and up 36% in the United Kingdom.

In Australia, comparable specialty retail sales for the 12 months were up 1.5% and up 1.9% in New Zealand, with the strongest performance in both Australia and New Zealand being in the December quarter – up 2% and 4.8% respectively on the September 2011 quarter.

Australian retail outlets account for nearly half of the 24,000 outlets in the group’s 118 outlets, according to the 2011 annual results.

Co-chief executive Steven Lowy says there was good demand for space, particurlarly in the December quarter, the strongest for the group in two years, with 3,000 leasing deals signed.

The Australian / New Zealand portfolio was more than 99.5% leased at December 31, 2011, with the United States portfolio at 93.1% and the United Kingdom at 99%.

Across all regions, Westfield shopping centres are 97.5% leased.

Lowy says there was “solid growth” in average rents by 3.5%.

In the United States, comparable specialty retail sales for the 12 months to December 2011 were up 7.1%, with sales in the December quarter up 9.8%.

At Westfield London, sales for the year were over £960 million, up 10.8% year on year.

“Particularly pleasing was the record volume of leasing activity during the year, with over 5,100 leases agreed covering over 960,000 square metres of retail space. This highlights the retailer demand for our high quality portfolio globally,” write co-CEOs Peter and Steven Lowy. 

Peter and Steven Lowy say the result was at the upper end of Westfield’s earnings forecast range after absorbing a 12% appreciation in the Australian dollar to the US dollar and an 8% appreciation to the UK pound over the year.

Currently, the group has $2.4 billion worth of projects under construction, with Westfield’s share being $1.3 billion. This includes Stratford City, in east London, which opened during the year and is the largest urban shopping centre in Europe and adjacent to the London 2012 Olympic venue.

The centre has had 13.6 million shopping visits in its first 14 weeks from opening to December 31, 2011.

During the year, Westfield commenced work on $760 million worth of new projects, including Fountain Gate in Australia and UTC in San Diego.