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Creation Date: Fri, 20 Mar 2009 GMT

Westfield posts $2.2bn loss after asset write-downs

26th Feb 2009

Andrew Harrison | February 26, 2009
Article from: Dow Jones Newswires
WESTFIELD posted a full-year net loss of $2.2 billion after write-downs on asset values and adjustments to financial instruments.

The world's largest shopping centre owner by market value had a net profit of $3.44 billion in 2007.

Westfield's total sales of $4.35 billion in the year to December 31 were up 4.5 per cent from $4.17 billion in the previous year.

In the past year, retail sales at Westfield's malls, which the company continually redevelops and expands to justify raising rents, have slowed, particularly in the US where the company has about half of its centres.

"The group continued to deliver strong underlying earnings in a challenging global environment," said Peter Lowy and Steven Lowy, Westfield's co-managing directors, in a statement, adding that a strong performance from its Australian portfolio had offset a deterioration in the US, UK and New Zealand.

Last year, the company's comparable shopping centre net operating income grew 2.8 per cent, driven by growth in Australia and New Zealand of 4.7 per cent, growth in the US of 0.5 per cent and a decline of 1.8 per cent in the UK.

Westfield operates 119 shopping malls in Australia, the US, UK and New Zealand, with about half located in the US and mostly on the West coast.

Full-year operational earnings were $1.94 billion, up 9 per cent from $1.79 billion a year earlier, the company said.

In the second half, the company wrote down mark to market adjustments of financial instruments of $1.3 billion and asset revaluations of $3.3 billion, the latter principally due to an increase in capitalisation rates.

Westfield has seven projects under construction for a forecast investment of $4.7 billion, of which the company's share is $4.6 billion, including Stratford, in London, and the recently commenced $860 million Sydney City project, which is expected to be completed in 2012.

The five smaller projects under construction, representing a group investment of $700 million, were expected to be completed during 2009 and 2010, it said.

Westfield said it wasn't planning to start any large project this year.

Westfield reiterated its forecast of operational earnings and distribution for this year in the range of 94 cents to 97 cents a security.

Last month, Westfield said it would pay a final distribution of 53.35 cents, unchanged from a year earlier, bringing its full-year distribution to 106.5 cents, including 6.5 cents of associated income hedging.