us shoppers stick to the bigger malls...

TP Note: I would seriously love to know what "gripe" Carolyn Cummins has with Centro - perhaps she has a very good "relationship" with its rival??? It is getting to the stage that I don't even want to bring any of her articles to the attention of the HC Forum any more, because imo they are full of bias. Whether "it's her job" or not; her reporting style is very much unbalanced imo. Or could it be that Westfield just happen to have a much better PR team??? Anyways, I'm off to enjoy some Biennale for the day. - Pie
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Source: www.smh.com.au/business

US shoppers stick to the bigger malls
Carolyn Cummins
July 12, 2008

PROPERTY retail landlords are having a mixed time in the United States, with the smaller centres hard hit by the weaker economy while larger rivals remain able to weather the storm.

Preliminary data for US shopping centres and malls this week showed a rise in vacancy levels of 50 basis points in the June quarter in open-air neighbourhood/community centres to an average 8.2 per cent, the highest level since 1995.

This will be bad news for managers of Centro Properties, trying to sell its centres in the US, but better news for Westfield.

The data showed larger enclosed malls, typical of what Westfield builds, had a smaller vacancy increase of 40 basis points, to 6.3 per cent The data is interesting in that the first quarter of a year is typically seasonally weakest as tenants change leases after the important fourth quarter Christmas/holiday trading period.

A US retail analyst with Goldman Sachs JBWere, Simon Wheatley, said the declines in the second quarter to June 30 were a strong counter trend putting some uncertainty on occupancy levels in the next 12 months.

Westfield derived 44 per cent of its net property income from the US, and 20 per cent of its development work was there, he said.

"The Westfield-style malls are typically more fashion and general merchandise focused and as such are more discretionary," Mr Wheatley said. "Consequently, while they will show more resilience, there is no doubt that the prospects of occupancy and rent growth from their assets broadly follow the trends of retail spending. In the US this is currently under some pressure."

He said the main impact to vacancy levels in the latest US figures was in small centres.

"We had expected this [lower quality assets with poorer capitalised tenants feeling the first effects of consumer weakness] and continue to view malls as a more favourable retail investment."

Matthew Bertram of Deutsche Bank said Westfield remained well placed compared with other property stocks that might struggle to provide stable earnings next year.

"Despite slowing US retail sales, underpinning Westfield 2008 outlook is that Australia's specialty leases are generating levels above inflation," Mr Bertram said.

" Our analysis shows that Westfield's capital and strategic positioning is significantly stronger now than at the time of the 2004 merger. Westfield has successfully reduced gearing, improved asset quality and lifted recurring earnings". But the broker said risks for Westfield in the US included tenant bankruptcy, leasing and construction overruns.


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