Westfield Group Funds From Operations Drop on Asset Sales

Westfield Group (WDC), the world’s biggest mall operator by assets, reported a 3 percent drop in first-half funds from operations as A$4.9 billion ($4.4 billion) of asset sales in 2012 and 2013 cut property income.

Westfield Group’s funds from operations slid to A$729 million in the six months to June 30 from A$751.2 million a year earlier, the Sydney-based company said in a statement to the Australian stock exchange. That compared with a forecast of A$729.4 million, based on the median of three analyst estimates compiled by Bloomberg News.

Westfield Group has been selling stakes in its malls to investors and retaining management rights to boost income and fund higher return activities including development. Australia’s biggest publicly-traded property trust will boost investments overseas, including in new markets, as growth at home slows, co-Chief Executive Officer Peter Lowy said in February.

Westfield plans “to continue redeploying capital from further joint ventures and non-core asset disposals,” Peter and Steven Lowy, joint-CEOs of Westfield Group, said in today’s statement.

Westfield Group’s funds from operations equated to 33.1 cents a share, a 0.9 percent increase from a year earlier, as it bought back 140.7 million shares since it announced its repurchase program in February 2012.

Global Operations

Westfield Retail, which owns interests in its parent’s Australian and New Zealand malls, reported first-half funds from operations of A$300.5 million, or 9.93 cents a share, it said in a separate statement. That compared with the A$297 million median of three analyst estimates compiled by Bloomberg News. A 1.8 percent increase in comparable net operating income and the completion of redevelopments contributed to the increase, it said.

Westfield Group shares slipped 0.7 percent to A$11.05 at the close of trading in Sydney, while Westfield Retail shares rose 0.3 percent to A$2.93. The S&P/ASX 200 index added 0.1 percent.

Westfield Group’s management income rose 7 percent to A$64 million, as the assets it manages surged 10 percent to 67.9 billion, it said today. Net property income fell 5 percent to A$975 million, it said. After adjusting for the divestments, net property income was up 6 percent.

Westfield Group’s comparable net income rose 4.3 percent in the U.S., 1.8 percent in its Australia and New Zealand business and 0.2 percent in the U.K., it said today.

U.S. Project

At Westfield London, the company is moving forward with an expansion at the site, having received approval for more than 500,000 square feet (46,452 square meters) of additional space and more than 1,500 apartments, Steven Lowy said today on an analyst teleconference.

In its World Trade Center redevelopment in New York “demand for that center is absolutely unprecedented” with potential tenants including international luxury and high street retailers, and expectations for 400,000 visitors a day, Lowy said on the call. Westfield formed a joint venture in July 2011 with the Port Authority of New York and New Jersey to redevelop the center.

In Brazil, the company continues to review opportunities after dissolving its joint venture with the Almeida Junior Family in April, Lowy said today.

Westfield Group, which reported net income that fell 36 percent to A$514.8 million for the period, will pay a first-half dividend of 25.5 Australian cents a share, it said today. Funds from operations for the year to Dec. 31 are forecast to be 66.5 cents a share, it said.

Westfield Retail (WRT), which today reported net income of A$402.1 million for the half, forecast full-year funds from operations of 19.85 cents a share, which it will pay out in its entirety.

To contact the reporter on this story: Nichola Saminather in Sydney at nsaminather1@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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