This article is from the Australian Property Journal archive
WESTFIELD Group is pushing forward with the proposal to split its Australia/NZ and international business as planned, despite reports that its major investors are unhappy with the proposal.
In December last year Westfield and Westfield Retail Trust proposed to merge their Australia/NZ business to form Scentre Group, while Westfield’s international business would become Westfield Corporation.
Some investors such as UniSuper, which has a 7.27% stake in WRT was unhappy with the $850 million payout to WRT investors, and on the other hand Westfield shareholders would receive 1,000 securities in Westfield Corporation and 1,246 securities in Scentre Group for every 1,000 Westfield securities.
The investors demanded Westfield and WRT amend the proposal, but yesterday Westfield did not announce any changes to the terms.
Westfield co-CEOs, Peter Lowy and Steven Lowy AM said the proposal has the unanimous support of the Westfield board and the independent directors of WRT and a vote to consider the proposal is expected to be held in late May 2014.
Westfield yesterday reported an AIFRS net profit of $1.60 billion for the fiscal year 2013, down 6.7% from the previous year. Funds from operations increased 2.3% to $1.44 billion, which is inline with forecast.
Distribution for the 12 months was $1.08 billion or 51.0 cents per security, an increase of 3.0% and also in line with forecast. Return on contributed equity for the year was 11.8%, up from 11.4% in 2012.
Net property income for the year was $2.0 billion, 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 $140m and project income increased 5% to $204m.
For the 12 months, comparable property net operating income in the United States was up 4.7%, the United Kingdom up 4.3% and Australia up 2%.
At 31 December 2013 the portfolio in the United States was 94.5% leased, up 60 basis points on the prior year, with the United Kingdom at 99.3% and the Australian/NZ portfolio remaining over 99.5% leased.
WDC’s international portfolio achieved specialty sales productivity of $US667 per sq ft and WDC’s Australian portfolio achieved specialty sales productivity of $9,901 per sqm. Comparable specialty retail sales for the year were up 5.7% in the United States, up 3.2% in the United Kingdom, up 0.4% in New Zealand and up 1.4% in Australia.
“Our Australian business and platform has proved highly resilient, due to the high quality of the portfolio with excellent sales productivity, almost full occupancy and continued growth in average rents and net property income. It is pleasing to note the improvement in retail sales growth with comparable specialty sales up 3% in the December quarter and up 4% in January 2014.
“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 will be brought together in our existing centres and future redevelopments,” Steven Lowy said.
The group confirms its 2014 forecast for FFO, prior to the restructure proposal, of 68.6 cents per security. This would represent an increase of 3.2% and takes into account the full year impact of the asset divestments and buyback completed during 2013.
The distribution forecast for 2014, prior to the restructure proposal, is 52.5 cents per security, up 3% from 2013. As part of the proposal announcement, WDC announced forecast pro forma FFO for 2014 of: Scentre Group – 21.5 cents per security and Westfield Corporation – US39.8 cents per security.
The combined FFO forecast for Scentre Group and Westfield Corporation equates to 70.5 cents per equivalent WDC security for 2014, representing an increase of 6% on WDC’s FFO per security for 2013.
Meanwhile WRT announced an AIFRS net profit of $777.1 million or 25.85 cents per stapled security. Funds from operations (FFO) were $596.8 million representing 19.85 cents per stapled security, up 2.5% and in line with forecast. The full year distribution of 19.85 cents per stapled security, up 5.9%, is also in line with forecast.
“Today our portfolio is well positioned with low vacancy and high sales productivity and we are encouraged by the improving retail sales growth in the December quarter, which continued into January,” managing director Domenic Panaccio said.
For the year ending 31 December 2014, WRT is forecasting to deliver FFO of 20.4 cents per stapled security representing a 2.8% increase on the prior year. The distribution payout for 2014 is forecast to be 100% of FFO, being 20.4 cents per stapled security.
The 2014 forecast assumes comparable net operating income growth of 2.0% to 2.5% for Australia and no material change in the current operating environment. It excludes the impact of the merger proposal or any future capital transactions.
Finally the Westfield-managed Carindale Property Trust (ASX: CDP) delivered a half year net property income of $19.4 million up 11%, which includes the contribution from the major redevelopment completed in August 2012. AIFRS profit for the half year was $18.7 million (2012: $8.4 million). Distributable income, which excludes unrealised fair value adjustments of $8.1 million, was $10.6 million, an increase of 10% on the previous corresponding period.
The centre was valued as of 31 December 2013 at $1,370.2 million (CDP share $685.1 million). The net tangible assets of the Trust were $6.57 per unit.
Total distribution for the period is $10.6 million or 15.10 cents per unit. The distribution is payable to members on 28 February 2014. The tax deferred component of this distribution is estimated to be approximately 60%.
Property Review
