Despite those slowing sales from its Australian retailing powerhouse, shopping centre giant, Westfield Group is looking to start building again.
After a year of starting no projects and finishing existing or underway ones, the company has lined up several in Australia and the uS, and started planning on others.
It yesterday reconfirmed its 2010 guidance and revealed it now expects to start about $1 billion worth of development projects in 2010.
That’s despite the sharp slowing in sales at most shops in its 44 Australian malls, a slowing in New Zealand, and continuing lacklustre growth in the US and UK, although sales in both these markets are no long falling.
In told the market yesterday in its first-quarter update the company was experiencing strong results from the Australian and New Zealand portfolios, notwithstanding the anticipated softening sales growth for the quarter.
Of the $1 billion, about $800 million of the new projects will be in Australia.
”Whilst we are not yet ready to commit to major projects in the United States or the United Kingdom outside of London, we are undertaking particularly in the United States a number of smaller projects totalling around $200 million,” Mr Lowy said.
During 2010 the Westfield said it expects to commence approximately $1 billion of new projects:
- Sydney City Office Tower $350 million (that’s part of the huge CBD redevelopment project based on Centrepoint).
- Belconnen $125 million in the ACT.
- Fountain Gate $250 million in Melbourne.
- And various United States Projects at a cost of US$200 million.
Joint group managing director, Steven Lowy, said retail sales and occupancy had improved in the US and the UK after a reduction in bankruptcy store closures.
”Given the improved environment we are now confident to expand our development program for the current year to around $1 billion of new project,” he said.
He said the decision to start developments this year was reversing the decision of one year ago to put project commencements on hold.
Mr Lowy reconfirmed the company’s 2010 distribution forecast of 64c per security based on a payout level of between 70%- 75% of operating earnings.
Some analysts had been looking for an improvement.
Australian sales in the year to March 31 totalled $21.5 billion. The company said Australian and NZ malls experienced nearly full occupancy at 99.5%.
Revenue at US centres, which account for almost half of Westfield’s 119 shopping malls around the world, rose 5.3% on a headline basis from a year ago, but were still down 5.4% on a comparable store basis.
The company will also undertake pre-development activity of about A$10 billion, and will seek to start up to A$1 billion of projects every year after 2010, it said in the statement.
After jumping 34c in early trading after the update was released, Westfield securities retreated later today to end up 1c at $13.14.
The securities have underperformed the wider market by around 47% since 2004, when all the companies were reorganised into one group.
