Shopping centre owner Westfield Group has confirmed its full year financial guidance after a mixed sales performance in the September quarter.
The company said it still expected to pay a distribution of 48.4c per security for calendar year 2011.
And it also confirmed its forecast of funds from operations (FFO) of between 64c and 65c per security for 2011, and operational segment earnings of 74.6c per security.
But the retailer, which owns 50% of Westfield Retail Trust (which owns malls in Australia and NZ) and has malls in the US and UK and is expanding into Italy and South America, reported patchy sales figures for the three months to September 30.
Australia was subdued as was NZ and the UK, while growth in the US remains solid, but from a low base.
According to the figures released yesterday, retail sales at its Australian centres were down by 1.7% in the three months to September 30.
Major stores had a 3.8% decline in sales, specialty stores had a 1.4% decline, but the so-called ‘mini majors’ category had a 3.2% rise in sales in the period.
In New Zealand, total retail sales were up by 0.8% in the third quarter.
In the UK, comparable retail sales were up by 0.1% in the three months to September.
In the US, specialty retail sales for the 12 months to September 30 were up by 5.6% from the prior 12 months, Westfield’s said.
Rents in the three months to September, when compared to the previous corresponding period, were up 3.8% in Australia and New Zealand, up 3.3% in the US, and down 2.4% in the UK.
Westfield Group Co-CEOs, Peter Lowy and Steven Lowy, said in yesterday’s statement: "This was an exciting and active quarter for Westfield, with the immensely successful opening of our Stratford City project adjacent to the site of the London 2012 Olympics, together with concluding the £1.75 billion joint venture of the centre.
"We are very proud of what we have achieved at Stratford City. This world class shopping centre was delivered on time, on budget and over 95% leased at opening.
"More than 6.5 million customer visits have occurred in the 8 weeks since opening, including over 1 million visits in the centre’s first week, a record for our company.
"Importantly, we announced the expansion of our business franchise into new markets including Brazil and the acquisition of a strategic development site in Milan, which we believe is the best major retail development site in continental Europe," Steven Lowy said.
During the quarter, WDC reached an in principle agreement on the US$1.3 billion joint venture of the retail premises at the World Trade Center in New York.
WDC also recently announced the sale of a half share interest in Cairns Central in Queensland for $261 million at a cap rate of 5.2%, representing a $35 million, or 16%, premium to book value.
"We believe the recent Cairns Central sale augurs well for asset values in our Australian portfolio," Steven Lowy said.
Westfield said it was continuing with pre-development activity on $11 billion worth of development work, and expected to start more than $750 million of new projects in 2011.
The value of new developments would rise to $1.25 billion in 2012 and to $1.5 billion in 2013, the group said in the statement.
WDC securities ended up 13c at $7.85 yesterday
And the outlook from the country’s biggest bank, the Commonwealth Bank of Australia, was also subdued.
Chairman David Turner told the AGM in Brisbane yesterday the bank expects subdued credit growth to continue into next year, and says gains in productivity will drive improvements in its performance.
Mr Turner said there was nothing to suggest that subdued credit growth in the 2011 financial year would improve in 2012.
"Fundamentally, it comes down to confidence, and its confidence that will encourage both individuals and corporations to invest for growth," he said on Tuesday.
Parts of the Australian economy were subject to fragile consumer and business confidence, political uncertainty and a strong Australian dollar, Mr Turner said.
"Against this backdrop, we will continue to operate in a disciplined and prudent manner," he said.
"We will maintain a focus on driving productivity initiatives, and these will deliver sustainable improvements in business performance to provide superior returns to shareholders.
"While the resources sector is performing well, other parts of the economy are subject to headwinds.
"These include fragile consumer and corporate confidence, political uncertainty, a strong currency and natural disasters.
"Ongoing offshore instability continues to impact the domestic economy, and this has the potential to place further upward pressure on wholesale funding costs for domestic banks," he warned.
CBA shares rose 36c to $49.68 in a market that edged up 20 points or so on continuing nervousness about Italy.
