Westfield to cut spending and distribution payout

Westfield posted a net loss of A$708 million for the six months ended June 30 after devaluations on its properties. Photo / Michael Craig

SYDNEY - Shopping centres owner Westfield Group will cut its distribution payout and reduce capital expenditure on developments next year to improve the group's finances.

Joint managing director Peter Lowy said yesterday that the distribution payout level would be set to between 70 and 75 per cent of operating earnings, effective from next August.

"Going forward the change in distribution payout level will allow the group to retain approximately A$500 million ($610 million) per year," Lowy said.

"This will be deployed into the group's future capital activities including strategic developments which have targeted long-term investment returns of between 12 and 15 per cent and any acquisitions opportunities that may arise."

The distributions this month and next February will continue to reflect the current payout ratio of up to 100 per cent of operating earnings.

For the first half of this year, Westfield's operating earnings, its preferred measure of profitability, was A$1.040 billion, up 12.1 per cent or up 8.3 per cent on a constant currency basis.

Its reported result was a net loss of A$708 million for the six months ended June 30, after booking non-cash devaluations on its properties.

Its interim distribution was 47c per security, with A$1.031 billion to be paid out of total available funds of A$1.057 billion.

The group also said it did not expect to begin any new major developments until after June next year.

"The retention of earnings together with the group's strong balance sheet position, and the reduction of future capital expenditure on developments enhances the group's financial position and earnings growth profile going forward," Lowy said.

Westfield said assuming no material change in economic conditions or currency exchange rates, its guidance for this year remained unchanged.

It had forecast operating earnings and distributions to be in a range of 94-97c per stapled security.

- AAP