2012 was a significant year for the Group as we continued the implementation of our strategic plan, the benefits of which were evident in our 2012 results.

Our strategic plan continues our tradition of positioning the Group at the forefront of our industry by adapting our business for the next generation of retail and consumer trends in a way that maximises long term value for security holders.

The strategy has two aspects, an operating strategy and a capital management strategy.


Our operating strategy is to develop and own superior retail destinations in major cities by integrating food, fashion, leisure and entertainment using technology to better connect retailers with consumers. We aim to operate our centres at the highest standards and efficiency to create assets that are highly productive, have strong franchise value and have the ability to attract the world’s leading retail brands. We are implementing this strategy and improving the overall quality of our portfolio through the creation of flagship centres in some of the world’s leading cities like London, New York, Sydney, Los Angeles, San Francisco, Milan and Melbourne.

Our portfolio now comprises 105 shopping centres in 5 countries with over 22,800 retail shops, over 1.1 billion annual customer visits generating $40 billion in retail sales. This, together with our globally recognisable brand, provides us with a unique perspective of the emerging trends and drives us in how we adapt our business for the next generation of retail.

This adaptation lies in four key areas:-
  1. The quality of design and the standard of services
  2. The growing internationalisation of retail brands
  3. The higher standard of food and its integration with fashion and entertainment; and
  4. The creation of great customer experiences

Through our development of iconic malls, we combine these elements to make the mall an essential part of the city and the community’s social and economic fabric.

Our focus is to invest our capital and expertise in assets that can continue to adapt in these key areas and thereby be the destination of choice for shopping, dining, entertainment, events and socialising. This is highlighted by our recently completed developments at Westfield Sydney and Westfield Stratford City.

Our $1.2 billion project at Westfield Sydney, which completed in 2012, has changed the face of retailing in downtown Sydney - with its mix of domestic and international luxury and high street retailers integrated with a premium dining experience. This centre achieved annual specialty sales of $15,660 per square metre, the highest in the Group’s global portfolio.

Westfield Stratford City, a £1.8 billion development in east London, achieved retail sales of £940 million in 2012, its first full year of trading. Its proximity and interaction with the London 2012 Olympic games demonstrated our capacity, expertise and brand to a global audience on a scale unprecedented in the Group’s history.

In 2012, our two flagship centres in London achieved combined retail sales of more than £1.9 billion with over 70 million customer visits. Less than five years ago, neither mall existed.

Of course, any consideration of the next generation of retail must include a digital technology platform.

In 2012, we announced the appointment of a Group Chief Digital Officer, reporting to the Co-CEO, and the launch of Westfield Labs, our digital business group based in San Francisco.

Westfield Labs is working on utilising our global position to innovate and develop the technological platform and infrastructure necessary to converge the digital shopper with the physical world.

With so many shoppers now connected to mobile devices, we are well advanced with strategies to connect the digital shopper with our malls including sophisticated car‑park technology, concierge and lifestyle services, efficient delivery channels for retailers and utilising social media and interactive advertising to better engage with consumers.

The most fundamental element of our shopping centres of course, is the shops themselves. The retailers remain the driving force that attracts shoppers to Westfield centres around the world and increasingly these retailers are represented in multiple markets. Our strength over the past 53 years has been to develop relationships with retailers around the world, in some cases introduce them to new markets within the Westfield portfolio and to anticipate and understand their needs within the operating environment.

All of the key elements – the international retailers, luxury brands, food, fashion, entertainment and experience combined with greater use of digital technology will continue to evolve and be brought together in our future development opportunities.

Our pipeline of future development opportunities now stands at $12 billion, with the Group’s share being $5 billion, including major iconic developments at Milan and at Croydon in south London, the expansion of Westfield London, and the redevelopments of Century City and Valley Fair in California and Miranda in Sydney. In addition, work is underway at the Westfield World Trade Center in New York.


Much has been said about the threat of online shopping and the impact it could have on bricks-and-mortar retail. As with any change in the world of retail – and there have been many over our history of more than 50 years – Westfield has viewed the advent of e-commerce and mobile adoption as an opportunity, a chance to ensure that our malls, retailers, and shoppers can be part of this digital evolution while staying true to the fundamentals of successful retail.

Technology has changed the world of retail in innumerable ways: it has led to the significant structural change of some retail categories, and to the proliferation of others. It is predicted 25 billion devices will connect to the Internet by 2015 and 1 billion people will be using smartphones and tablets by 2016. Shoppers themselves are now more connected than ever, and many retailers are equally advanced in their connection with the digital world. Westfield sees its role – as with its physical malls – as being able to bring these groups together so they can continue to connect meaningfully at all touch points both before they visit our centres and when they are in our centres.
Our recently-created digital division Westfield Labs has a clear mandate to seamlessly connect the digital shopper with the physical world by leveraging social, mobile and digital market opportunities. These will take shape in many different forms: some will allow Westfield to stay in touch with shoppers before, during and after their shopping experience; others will leverage physical locations to better serve local customers; and others yet could create Westfield-branded services encouraging off-line experiences. Ultimately, it is digital assets that will help us drive more foot traffic and transactions to our centres.

There are already a number of digital initiatives underway with our services, facilities, partners and shoppers. For example, we have globalised how we communicate with our shoppers across our social media footprint as well as our plans to expand how we offer free WiFi to our shoppers. Both of these undertakings are important services that allow us to stay engaged with our shoppers, bring added value to our retailers, and close the gap between the online and offline shopping experience. In addition, we are in the process of collaborating with forward thinking technology companies that will help our company better understand our shoppers when they visit our centres.

Our development program demonstrates this as we continue to invest in iconic retail centres around the world. We are confident these elements are complementary and that by integrating the best physical and digital elements of retail, Westfield Group can continue to provide our retailers and shoppers around the world with a superior retail experience.


Our capital management strategy is focussed on investing capital in the acquisition and development of world class iconic shopping centres in major world cities and positioning the Group to enhance our return on contributed equity and long-term earnings growth.

A key component of the strategy is the efficient sourcing of capital in order to pursue our operating objectives. This allows the group to reduce invested capital through joint ventures and non-core asset sales, and continue the reinvestment of capital into high return opportunities.

The strategy commenced with the establishment of the Westfield Retail Trust in late 2010, which created a joint-venture partnership over the Australian and New Zealand portfolio.

Since late 2010, our business has expanded with assets under management increasing by more than $6 billion to $64.4 billion while the Group’s investment in those assets has been reduced by $15 billion and we have returned over $8.4 billion to security holders.

Specifically, we have:
– Successfully completed and opened $4.8 billion (the Group’s share being $2.5 billion) of developments and expansions including Stratford in London and Sydney in Australia
– Expanded our business with the World Trade Center development in New York, our entry into Brazil and the development opportunity in Milan, Italy
– Completed a number of joint ventures including Sydney, Stratford and two joint ventures across 18 assets in the United States
– Disposed of 19 non-core assets globally – 8 in the United States, 4 in the United Kingdom, 4 in Australia and 3 in New Zealand
– Invested $0.3 billion in additional interests in 3 Australian assets; and
– Bought back 115 million securities for $1,150 million via the on-market share buyback.

The result has seen return on contributed equity substantially improve to 11.4% in 2012 from around 9% in 2010 and our earnings from management and project income increasing to approximately 22% of Funds From Operations (FFO), up from 17.5% in the prior year, and from less than 10% prior to the Group restructure in 2010.

This highlights a key benefit of joint ventures, allowing the Group to earn additional management fee and project income on a reduced capital base.

Our business and balance sheet is in a strong position. Since our restructure, we have been able to grow our business, reduce our net debt from $19 billion to $11 billion, reduce our gearing ratio from 37.4% to 32.5% and return capital to shareholders.

We remain well positioned to grow our business and fund our investment in the development pipeline.

We have confidence in the Group’s business model and opportunities for growth.

We are focussed on continuing to improve the quality of our portfolio through our $12 billion development pipeline together with acquisition opportunities in existing and new markets. Importantly, we will be able to do this without the need for additional share capital. We also plan to continue redeploying capital from further joint ventures and non-core asset disposals, as opportunities arise.


The development of world-class iconic malls in major cities is integral to Westfield‘s strategic plan. Over the past ten years Westfield has developed a number of truly innovative world-class shopping malls that have changed the face of retailing including Sydney, Bondi Junction, Doncaster and Chermside in Australia, San Francisco, Valley Fair and Century City in the United States and London and Stratford City in the United Kingdom.

Westfield’s development pipeline continues to focus on large iconic shopping malls in global cities such as the Westfield World Trade Center in New York and now includes $12 billion of future developments including Milan; Croydon in South London; together with the expansion of Westfield London and redevelopments of Miranda in Sydney and Valley Fair and Century City in the United States.


Westfield, in a joint venture with the Port Authority of New York and New Jersey, is developing a 365,000 square foot shopping and dining complex in Manhattan’s iconic World Trade Center. The project will feature multiple levels including the WTC Transportation Hub and concourses that run throughout the entire World Trade Center site. Westfield World Trade Center will offer a world-class shopping experience which captures the essence and character of Lower Manhattan and the City of New York.
World Trade Center


The redevelopment of Westfield Miranda will create an exceptional retail destination for Sydney’s southern region with an additional 100 retailers including a high-quality fashion offer, a new entertainment and dining precinct and premium services. Area: 127,000 square metres.


In Milan, Westfield and its joint venture partner Gruppo Stilo aim to create one of Europe’s premier retail, entertainment and leisure destinations, integrating luxury retailers with the best leisure and dining facilities on a 60-hectare site adjacent to Linate Airport. Area: 170,000 square metres.


The redevelopment of Westfield London is a £1 billion plus project that will add 51,000 square metres of high-quality retail, residential and mixed-use space to create an appealing townscape with a vibrant pedestrian quarter. The precinct’s 1,500 new homes, shops and businesses will be a valuable addition to the community that lives and works in the White City Opportunity Area. Area: 213,000 square metres.


The £1 billion joint venture between Westfield and Hammerson to redevelop the Whitgift and adjacent Centrale shopping centres will completely transform retail in Croydon, re-establishing the area as the premier retail, leisure and entertainment destination for South London. Area: 200,000 square metres.


The ongoing investment in the revitalisation of Westfield Century City will redefine retail, leisure and entertainment in Los Angeles. The redevelopment includes more than 100 new premium specialty retail shops and dining options, more parking, a new central plaza and more open space with attractive walkways and convenient pedestrian access. Area: 1.2 million square feet.
Century City


Located in Silicon Valley, Westfield Valley Fair is one of the best-performing malls in the United States. The redevelopment will include new fashion, leisure and luxury retailers as well as multiple entertainment and dining options, reinforcing Westfield Valley Fair’s position as one of the premier retail, entertainment and leisure destinations in Northern California.
Valley Fair


The 2012 results saw the Group achieve a net profit of $1.72 billion up 18.3% on the 2011 year. The performance for the year has been very good and in line with expectations.

Funds from Operations (FFO) were $1.47 billion representing 65.0 cents per security, up 0.3% on the prior year and in line with forecast. Adjusting for divestments and securities buyback during the year, FFO was up 6.0%.

Earnings before Interest and Tax was $2.12 billion, up 3% on the prior year, and net property income was $2.02 billion, in line with the previous year and up 7% adjusted for divestments.

Management fee income was $128 million, up 12% and project income was $194 million, up 31%.

Distribution for the 12 months was $1.11 billion or 49.5 cents per security, an increase of 2.3%.

Over $1.4 billion of new projects commenced in 2012, including the Westfield World Trade Center retail development in New York.

In February 2012, we announced the on-market buyback of WDC securities and as at 12 April 2013 we have bought back 115 million securities for $1,150 million at an average price of $10.01. In February 2013, we announced the extension of our buyback program for a further 12 months.

During the year, the Group raised and extended $3.9 billion of debt facilities. This included the £450 million 10 year public bond issuance in the United Kingdom and the US$500 million 10 year notes in the US 144A debt market.

At 31 December 2012, the Group had total assets of $35.9 billion, a gearing ratio of 32.5% and available liquidity of $6.0 billion.

For the 12 months, comparable property net operating income (NOI) for the Group was up 3.3% on the prior year with the United States up 4.2%, Australia/New Zealand up 2.9% and United Kingdom up 0.4%.

The Group’s operating performance for the year saw continuing high levels of occupancy, growth in average rents and comparable specialty sales growth in each market all with a serious focus on expense management. In 2012, overheads reduced by 3% and we will continue to focus on overhead savings in 2013.

The United States performance in the 2nd half of the year was strong with comparable NOI up 6.0% and resulting in the performance for the year exceeding the upper end of our forecast range. A significant component of this performance was the record number of shops we opened in the United States during the year.

The global portfolio at 31 December 2012 was 97.8% leased, up 30 basis points on the prior year. Over the year 4,668 leasing deals were completed covering 765,177 square metres of retail space. In the United States the portfolio was 94.4% leased, up 130 basis points, the United Kingdom up 50 basis points to 99.5%, Brazil at 93.3% and the Australian/New Zealand portfolio remaining over 99.5% leased.

The level of bad debts and arrears across the Group for the 12 months remained low and in line with previous years.

The Group’s global portfolio achieved specialty sales productivity of US$701 per square foot, for the 12 months to 31 December 2012, up 3.0% on the prior year. Comparable specialty retail sales were up 6.3% in the United States, up 0.5% in Australia, up 0.1% in New Zealand and up 12.8% in Brazil for the 12 month period.

United States

In the United States specialty retail sales growth momentum continued, now at US$485 per square foot (psf), the highest level of sales productivity for the United States portfolio and reflective of its improved quality post the completion of developments and the asset divestments. Sales growth has been across all categories and regions with our higher quality centres continuing to outperform.

During the year, over 1,600 leasing deals were executed. This represents 3.7 million square feet, with total rent for new specialty shop leases up 8.4% over expiring rents. At year end average specialty rent was US$63.56 psf, up 2.3% for the 12 months.

Australia and New Zealand

In Australia, whilst retail conditions have been subdued for most of the year the business has performed well. Sales productivity of specialty shops remains high at $9,887 per square metre and we continue to see demand for space from both domestic and international retailers.

Average specialty rent during the year for the Australian/New Zealand portfolio grew by 2.5% with average rent in Australia now at $1,521 per square metre (psm) and New Zealand at NZ$1,123 psm. In Australia over 2,400 leasing deals were completed. Excluding projects, these represented 15.6% of specialty area, and were completed at rents 2.5% lower than expiring rents.

United Kingdom

In the United Kingdom, the Group’s two world class centres in London attracted over 70 million customer visits during the year spending more than £1.9 billion. A highlight was the outstanding performance of Stratford City which achieved sales of £940 million in its first full year of trade. The centre’s proximity and interaction with the London 2012 Olympics demonstrates our capacity, expertise and brand to a global audience.


Our development program for the year is a key highlight as we continually strive to grow and improve our assets.

In Australia, we completed the $1.2 billion development of Westfield Sydney with the centre generating the highest specialty sales productivity in the Group’s global portfolio. Westfield Sydney has changed the face of retailing in downtown Sydney, with its mix of domestic and international luxury retailers and a premium dining precinct.

The Group successfully opened the $310 million redevelopment of Carindale in Brisbane and the $340 million redevelopment of Fountain Gate in Melbourne. The expansion of Carindale and Fountain Gate positions these centres in the top five of our Australian portfolio and amongst our top 10 performing centres globally.

In the United States the US$180 million redevelopment at UTC in San Diego opened in November and we have also made good progress during the year on our refurbishment program, completing US$370 million of projects at nine US centres, with a focus on adding a diverse range of products, services, discounters and food to our malls.

Part of our program in the United States has included the reconfiguration of around 2.8 million square feet of department store sites that were acquired several years ago. The emphasis of the program has been to continue to broaden the range of goods and services provided. This has seen the introduction of retailers such as Nordstrom Rack, Target, T.J.Maxx, Wal-Mart, Best Buy, Forever 21 as well as a number of grocers, gyms, cinemas and most recently Costco.

The integration of Costco into a mall format is a ground breaking initiative. Our first opening at Sarasota in Florida is soon to be followed by an opening at Wheaton in Maryland and a third store planned at West Valley in Los Angeles. We are pleased how well customers have embraced the integration of food with fashion, leisure and entertainment and are excited by the success of this format.

The Group’s joint venture operations in Brazil opened its development at Continente Park in Florianopolis, with the centre trading in line with expectations since opening.

We entered the Brazil market 18 months ago with an investment in an operating joint venture of 5 assets. This was our first step in a developing market, through an investment representing less than 1% of our portfolio. Our aim is to better understand the opportunities in this region and the appropriate operating structure for our investment in the longer term.

The Group currently has $1.4 billion of projects under construction with the Group’s share being $1.0 billion, of which $300 million has been invested to date. During the year works commenced at Westfield World Trade Center, the US$80 million redevelopment of South Shore in New York, the $95 million redevelopment of West Lakes in Adelaide and US$245 million of other projects in the United States. In addition, design and construction works commenced on the $390 million redevelopment of Macquarie in Sydney on behalf of AMP Capital.

For 2013, the Group expects to commence between $1.25 billion and $1.5 billion of new developments (WDC share $300‑$500 million). Developments are anticipated to commence at Miranda in Sydney, and at Bradford in the United Kingdom with works having commenced on the US$150 million redevelopment at Garden State Plaza in New Jersey, the US$90 million redevelopment at Montgomery in Maryland and the $400 million redevelopment at Mt Gravatt in Brisbane.


The Group expects to achieve FFO for the 2013 year of 66.5 cents per security. This forecast is prior to the impact of any transactions undertaken in 2013 and the redeployment of capital from such transactions. It assumes no material change in foreign currency exchange rates.
Distribution for the 2013 year is forecast to be 51.0 cents per security, up 3% from 2012.

Across our regions, comparable net operating income for 2013 is forecast to grow in the range of: 4.0%-5.0% for the United States and the United Kingdom; and 1.5%-2.0% for Australia and New Zealand.

Peter Lowy Peter Lowy
Executive Officer
Steven Lowy Steven Lowy AM
Executive Officer


2008 2009 2010 (1)2011 2012
Net Property Income (2) $2,496 m $2,721 m $2,602 m $1,958 m $1,945 m
Property revaluations $(3,340) m $(3,539) m $1,135 m $476 m $815 m
Profit/(Loss) After Tax $(2,197) m $(458) m $2,306 m (3) $1,453 m $1,718 m
Funds from Operations $1,727 m $1.854 m $1,833 m $1,492 m $1.474 m
Funds from Operations per security 88.92 cents 82.67 cents 79.61 cents 64.80 cents 65.01 cents
Return on Contributed Equity 10.6% 9.5% 9.1% 11.4% 11.4%
Distribution (4) $2,077 m $2,149 m $1,464 m $1,115 m $1,108 m
Total Assets Under Management $69,436 m $59,511 m $58,220 m $62,248 m $64,407 m
Shopping Centre Assets $53,404 m $45,453 m $33,539 m $34,653 m $32,400 m
Net Assets $24,762 m $24,113 m $16,526 m $15,489 m $15,330 m
Gearing (Net Debt as % Assets) 38.6% 35.2% 38.4% 38.4% 32.5%

Post-restructure through the establishment of Westfield Retail Trust (WRT) in December 2010 and the disposal of $12 bn of shopping centre assets.


Net property income is after the disposal of shopping centre assets amounting to: 2008 – nil, 2009 – nil, 2010 – $12.1bn, 2011 – $0.3bn, 2012 – $4.1bn.


Net profit before one-off accounting adjustments and charges in relation to the creation of WRT. Including the WRT accounting adjustments and charges (due to the distribution of assets to WRT) reported statutory net profit was $1,114 million for 2010.


The Group changed its distribution policy from up to 100% to 70%-75% of operational segment earnings commencing in the 2010 financial year. A further change was made in 2011 for the Board to determine distribution.