Westfield to Boost Overseas Investments on Retail Growth

Westfield Group, the world’s biggest shopping mall operator by assets, plans to increase investments in the U.S. and U.K. to take advantage of rising retail demand, Co-chief Executive Officer Peter Lowy said.

The company expects 60 percent of its interests in projects to be in the U.S. and U.K. in about four years, from about 55 percent now, Lowy said in a telephone interview from Sydney. Westfield is also on the hunt for a new “unique” market in Western Europe, similar to Milan, where it will next year start building one of the region’s biggest shopping malls, he said.

“You’ll see a bigger increase coming out of the other markets as Australian developments slow down a little bit,” Lowy said. “What we’re doing in Europe is trying to see if we can find other sites that have the characteristics of Milan, where the customer is underserved but has large amounts of disposable income, and the real estate is in the right place.”

Westfield, which is seeking to boost higher-return activities such as property development globally, today reported an 18 percent jump in 2012 net income to A$1.72 billion ($1.76 billion), driven by an increase in real estate management fees and project income. The company recorded net operating income growth of 4.2 percent in the U.S., 2.9 percent in Australia and 0.4 percent in the U.K., it said.

The shares rose 0.5 percent to A$11.14 at the close of trading in Sydney, extending this year’s gain to 5.5 percent. The benchmark S&P/ASX 200 Index added 0.7 percent, bringing its year-to-date advance to 8.3 percent.

Australia Slowdown

Westfield, which had 45 percent of assets under management outside Australia as of Dec. 31, saw weaker sales at home offset by three consecutive months of retail sales growth in the U.S. and a surge in job creation in the U.K. Retail sales in Australia fell for a third month in December, the longest stretch of declines in 13 years, as consumers spent less in an economy grappling with a weaker employment outlook.

The Sydney-based company expects property net operating income to climb as much as 5 percent in the U.S. and U.K. in 2013 and about 2 percent in Australia, it said. It also expects to start as much as A$1.5 billion of developments this year.

Westfield in August 2011 agreed to invest 115 million euro ($150 million) to buy a 50 percent stake in a site in Milan. The company is developing a mall in partnership with Italian firm Gruppo Stilo to capitalize on the city’s position as a European fashion hub, it said then.

The move was a “site-specific investment,” and Westfield has no plans to use the development to expand further in Italy, Lowy said today. Instead, the company is looking across Europe for a city and site with similar characteristics, he said.

Brazil Mall

In Brazil, where Westfield agreed to buy a 50 percent stake in Sao Paulo-based mall owner Almeida Junior Shopping Centers in August 2011, the company doesn’t foresee further investments soon, Lowy said.

“We’re still in the learning phase there,” Lowy said. “We need to learn to crawl before we can walk.”

Westfield had A$64.4 billion of assets under management as of Dec. 31, it said today. The company has A$12 billion of planned projects in the U.S., U.K., Australia, New Zealand, Brazil and Milan in partnership with groups including London-based Hammerson Plc and the Canada Pension Plan Investment Board. Westfield will invest A$5 billion in the projects, it said.

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