Westfield's Australian tenants score 5% discount on new leasing deals amid "subdued" retail conditions: March quarter update

Westfield speciality tenants signing new leases in Australian malls have scored an average 5.1% rent reduction than the expired rents, according to the group’s March quarter update.

The shopping centre group completed 380 leasing deals over the first three months of the year across its portfolio of 38 malls in Australia.

Excluding new projects, the leases represented 2.2% of specialty retail space across the Australian portfolio.

The rent reductions were offered against a subdued retail backdrop with comparable specialty sales up just 0.3% for the quarter.

Westfield reported that retail sales in the quarter were negatively impacted by the timing of Easter as well as 2012 being a leap year.

“Whilst retail conditions remain subdued the productivity of the portfolio remains high at $9,863 per square metre (psm) with continuing demand for space from both domestic and international retailers,” said Westfield in its quarterly update.

"Average specialty rent for the Australian / New Zealand portfolio grew by 2.4% from March 2012 with average rent in Australia now at $1,522 psm and New Zealand at NZ$1,127 psm.

"In Australia, for the 3 months over 380 leasing deals were completed. Excluding projects, this represented 2.2% of specialty area, which were completed at rents 5.1% lower than expiring rents," 

Overall, Westfield said performance across the group's global operations over the three months to March 31 was in line with expectations.

It previously reported that Westfield Sydney and Westfield Liverpool were the top performing mall in its Australia and New Zealand portfolio.

During the quarter, Westfield commenced $700m of new projects including the $400m redevelopment of the Mt Gravatt mall in Brisbane, the US$150m redevelopment at Garden State Plaza in New Jersey and the US$90m redevelopment at Montgomery in Maryland.

It also entered into an agreement with O'Connor Capital Partners to form a US$1.28bn joint venture comprising a portfolio of six Westfield regional malls in Florida while disposing of its joint venture interest in Brazil.

Westfield's global portfolio comprises 100 shopping centres in 4 countries with around 22,000 retail shops, 1.1bn annual customer visits and over $40bn in annual retail sales. 

The global portfolio at 31 March 2013 was 97.4% leased, up 20 basis points compared to the same period last year.