What's new? Westfield's solid performance continues, with its premium suite of assets and world-class management keeping the mama of shopping centres on top of its game. It is one of the pioneers in mall development and successfully transferred its vision to the US, Britain and, most recently, Brazil.
Westfield has a recognisable brand and 1.1 billion customer visits to more than 100 locations each year, generating more than $40 billion in annual retail sales.
And the high quality of properties and management can be seen in its impressive occupancy rates.
Earlier this month, the company revealed that occupancy rates were 97.7 per cent in the third quarter, up 40 basis points on the same quarter last year and 20 basis points higher than the June quarter. Leading the way were the Australian, New Zealand and British assets that are, essentially, fully leased at 99.5 per cent occupancy.
Sales were up across all operating regions in the past 12 months, with the US showing surprising strength. Comparable specialty retail sales increased by 8.4 per cent as consumers return. Average rents across the group are growing by at least 2.5 per cent.
And these gains are flowing through to shareholders, with management outlining a distribution of around 49.5¢ a share for the full year.
Outlook Westfield has put the wood on the table in terms of value-adding projects over the years and there are more in the pipeline.
In the development phase are projects totalling about $1.7 billion in capital expenditure, for which Westfield will be up for $1.1 billion. The single largest of these is the World Trade Center project, forecast to cost $US625 million ($603.9m) and slated for completion in 2015.
The company has completed the first stage of its new Continente Park Shopping centre in Florianopolis, Brazil.
In addition to having a top-tier portfolio of assets and management, Westfield is in the process of a modest share buyback and divesting non-core assets. Just a couple of weeks ago the company agreed to sell a £260 million ($398.2m) project in Bradford, England, to property fund manager Meyer Bergman. Westfield will build the mall and manage the centre, and will recoup book value of the assets for a site that does not fit in with its renewed focus on premium projects.
Price Westfield's solid operational performance has been reflected in the demand for its shares this calendar year. The stock is up around a third in 2012, compared to a gain of less than 10 per cent for the All Ords. The technical picture remains positive with a break above $10.75 likely to herald further gains.
Worth buying? Although the shares have performed strongly this year, there looks to be even more in the tank over the medium term. A robust and well-managed project pipeline along with low-cost financing should underpin earnings gains. Add a solid distribution policy, and this should ensure appetite for the shares remains as firm as the demand for the company's mall space.
Greg Smith is an analyst at Fat Prophets sharemarket research.
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