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Australia more resilient to crisis than UK, US, says Westfield

By Drew Cratchley
06 May 2009 4:23 PM

SYDNEY, May 6 AAP - Westfield Group, the world's largest shopping centre owner, says its business remains resilient dpesite the global recession, with its Australian operations leading the way.

Chairman Frank Lowy told securityholders at the company's annual general meeting Westfield was facing its most challenging times but delivered an optimistic outlook, describing shopping centres as "irreplaceable components of urban and suburban infrastructure".

"They outperform in good times, and are resilient during economic downturns," he said.

Mr Lowy reaffirmed Westfield's guidance for calendar 2009 operational earnings and distribution of between 94 to 97 cents per security, issued just last week.

Mr Lowy said he expected no further significant devaluation of Westfield's property assets this year, after writedowns of $3.3 billion in calendar 2008.

"I think we have seen on the devaluation front we are close to the bottom," he said.

"Relying on what we read and what is happening in the world, I don't expect we would have much more devaluation of our properties."

Net operating incomes in the US and UK are expected to decline this year as a result of falling shopping centre occupancy rates, securityholders were told.

But the outlook for Australia was more positive, with Mr Lowy predicting the local economy to fare much better than the other economies Westfield trades in.

"I think Australia is well positioned, particularly in relative terms to (the US and UK)," Frank Lowy said.

"I don't expect that we will fall into the same type of problems that they have fallen into.

"Our banks are a lot stronger, and there are many, many positives that there are not elsewhere.

"So I am reasonably confident we will be able to hold our position in relative terms."

Meanwhile, the chairman of Westfield's remuneration committee Fred Hilmer took the unusual step of defending Mr Lowy's calendar 2008 remuneration before any securityholders raised the issue.

Despite Westfield reporting an annual loss of $2.2 billion in 2008, Mr Lowy received a salary of $8 million, a cash bonus of $7 million and non-cash benefits worth just over $1 million.

"Just as Westfield is a unique company, Frank Lowy is a unique CEO," Professor Hilmer told the meeting.

"Frank's knowledge of the retail property industry and industry participants both locally and internationally, as well as his status as one of Australia's most respected and influential chief executive officers, is not in question."

Westfield's 2008 year operating profit, which strips out mark to market impacts on financial instruments and movements in asset values, rose 10.4 per cent to $1.94 billion.

Mr Lowy's 2008 remuneration was identical to that he received in 2007, Prof Hilmer said.

"In view of what the group was able to achieve in extremely difficult market conditions, the committee took the view that to reduce the CEO's remuneration would not have been a fair reflection of his performance or the Group's performance," he said.

Securityholders seemingly agreed, with over 90 per cent voting in favour of Westfield's remuneration report.

Westfield stapled securities 12 cents or just over one per cent to $10.69 on Wednesday.