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Westfield’s third quarter in line with expectations

Global shopping centre giant Westfield Group (ASX: WDC) has this morning released its third quarter update for the nine months to 30 September 2013, with operations largely performing in line with expectations.

The company, along with its affiliate Westfield Retail Trust (ASX: WRT), continued to strengthen its balance sheet throughout the period, divesting from a number of stores and using the proceeds to buy back shares whilst also developing its more profitable stores.

For instance, the company divested from seven of its US non-core shopping centres to Starwood Capital Group, which raised a total of US$1.64 billion, whilst it also sold its 16.67% interest in Karrinyup Shopping Centre, located in Perth, for $123.3 million.

Following these transactions, the company’s global portfolio now comprises of 91 shopping centres spread over four countries and 20,500 retail shops, which attract over 1 billion customers annually. Meanwhile, roughly $2.43 billion worth of shares were repurchased and “good progress” was made on its $2.7 billion worth of current development projects.

For the 12 months to September, comparable specialty retail sales increased by 4.5% in the US whilst remaining steady in both Australia and New Zealand. Specialty retail sales in the US also grew to their highest level ever reported at US$525 per square foot, reflecting the quality of the company’s refreshed portfolio.

Furthermore, the group’s global portfolio as at 30 September was 97.9% leased, which was up 20 basis points compared to the same period last year. In particular, leasing demand in the US remained strong with over 860 deals executed over the previous nine months, whilst average specialty rent rates also increased globally.

The company maintained its distribution forecast for the year at 51c per security.

Foolish takeaway

Westfield still has a number of challenges that it must overcome, such as patchy consumer and business confidence as well as the rapid rise of online retailing, however, its strategy to focus only on core assets is ensuring its future looks much brighter.

Whilst earnings may be impacted in the short-term due to its acquisitions and sales, Westfield poses as an attractive prospect for long-term focused investors and, with its sheer size and global diversity, is a better bet than others in the industry including GPT Group (ASX: GPT) or Stockland (ASX: SGP).

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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