Retail property giant Westfield Group said Wednesday that the "rapid and significant" rise in the value of the Australian dollar has impacted the value of reported foreign earnings.
But the group reaffirmed its operational segment earnings forecast of A$1.7 billion at the first meeting for the company since the Lowy empire was split last year.
Chairman Frank Lowy told the AGM in his last Chairman’s address before stepping down that the company is able to maintain guidance, despite the impact of the higher Aussie dollar because it has benefited from lower-than-anticipated funding costs due to the low interest rate environment in the US.
There was also a hint that the rumoured sale of poor performing US malls might happen, but no confirmation that the group plans to expand into continental Europe.
Media reports this morning suggest the US sale is very close, with 10, perhaps more malls involved with a value of between $US1 and $US1.2 billion.
The confirmed guidance is equal to 74.6c per security.
The earnings forecast compares with $2.06 billion reported in calendar 2010, which included a contribution from the Australian and NZ shopping centres in the spun-off Westfield Retail Trust.
Westfield also said funds from operations were expected to be $1.47 billion to $1.5 billion and the company was likely to pay a distribution of 48.4 cents per security for 2011.
"As we recently reported, the first quarter of 2011 has seen continued strong performance across the entire portfolio globally," Mr Lowy told shareholders.
He said Westfield was planning to start more than $10 billion of developments over the next five to seven years.
And, as it said recently in the first quarter update, the group is on track to start $750 million to $1 billion of new developments in 2011, including the UTC centre in San Diego, California, the first major development in the US in four years.
"In the United States, there is continued improvement in sales productivity for our retailers and consequently, in the level of rents we are able to achieve," Mr Lowy said.
"In Australia, our portfolio remains solid with strong demand from retailers for space and moderate sales growth for our speciality retailers."
In the UK, Westfield London continued to "power ahead", Mr Lowy said.
Specialty store sales in the US for March and April 2011, which included the Easter period, were up 7% on the same period last year, Mr Lowy said.
In Australia, they were up 4.4% and in New Zealand, they were up 3.6%.
For Westfield London, sales were up nearly 20%.
"This is quite strong and consistent evidence that retail conditions in all these markets are improving and we are hopeful that this trend will continue," Mr Lowy said.
Media reports this week have speculated that Westfield was close to offloading some of its US centres, especially in the weak states of California and the Midwest.
There has been talk that up to 17 centres could be sold. Now its back to 10 to 12.
But Frank Lowy made it clear change was coming to the US and the UK when he told the meeting: "We have signalled our intention to enter into more joint venture arrangements, especially in the United States. And we are also planning to focus on our most productive assets in the US and United Kingdom.
Besides the US malls, Westfield has started in the UK with the opening of Westfield London in 2008 and Westfield Stratford City centre.
Britain’s Independent newspaper reported this week that Westfield was in talks with an Italian developer to develop a shopping centre to the east of Milan, and that it was also bidding against rival property developers for a project in Brussels.
There’s also been talk that it might restart work on a mall in northern England.
There was a faint hint in Mr Lowy’s speech that Westfield was looking further than its traditional markets in Australia, NZ, the US and now the UK.
He told the meeting: "But there are other markets with stable and mature retail environments which present opportunities for Westfield to apply its expertise and improve the management and increase the value of existing shopping centres in those markets.
"We will continue to consider each of these opportunities on their merits, and proceed only where we are confident they will create value for shareholders."
The suggested increase in activity failed to excite the market and Westfield closed down 2c at $9.01, less than 20c above its low of $8.85 hit at the start of May.
