Mark Stefanek, CFO-U.S., is reporting for Westfield Group at NAREIT's REIT Week.
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Below are notes from the session.
4:34: Stefanek: Our philosophy is intensive management and redevelopment. We get 12 to 15 percent on incremental capital we spend. And we look to make the centers continually relevant. … Garden State Plaza, for example, has less than 20 percent of the same tenants it did in 1994. … We came from place where it's normal to have other types of users in malls—such as grocers. We talked about that so long in the U.S. that we stopped talking about it. … The business came to us. … And so far we've added three grocers to suburban malls. … We think it's very transforming for the mall.
4:35: Stefanek: We think the market is in a good place to recycle capital. We are looking at properties where we don't have the ability to spend significant money on redevelopment in the coming years. … We're looking at newwhere we haven't been in the past. … In the past we've stuck to the four markets we're already in (U.S., U.K., Australia, New Zealand), but now we're looking beyond that.
4:37: Stefanek: Our March/April sales in the U.S. were up 7 percent. Based on all of that, we are expecting 2.5 to 3.0 percent same-center NOI growth in the U.S. (And greater increases in Australia and the U.K.)
4:39: Stefanek: At ICSC, retailers came to do. … Another interesting point is that a lot of the food court tenants are basically franchisees. That business is doing well because they are actually able to get financing. … It's a small data point, but I thought it was very positive. … New concepts are going to the coasts. And tenants are going to B properties. … Retailers need to expand and they are going to not just the best centers.
4:40: Stefanek: In 2011 we will start somewhere between $750M and $1B in new redevelopment and in 2012 and 2013 it will be up to $1.5B in each year.
4:42: Stefanek: (On the World Trade Center.) We have the right of first offer. … We are talking to them about potentially doing retail. What's holding it up is one of the office buildings may not get built right away. How do you deal with that? We're a little bit the tail wagging the dog until the plan is set for the office building. … We are constantly meeting with the Port. We would like to be involved, but there is no hard and fast agreement.
4:48: Stefanek: We have an e-commerce mall in Australia. We have a different name-brand recognition there. We have a bunch of tenants signed up. The technology works. We have tenants that we don't have in the malls. … We'll see what comes of that. … As it relates to the U.S., the retailer doing the best is the one that is multi-channel—he's got a catalog, e-commerce and bricks-and-mortar. … There are retailers using spaces as showrooms. That argues for smaller stores. … (With some retailers) you can buy things on the Internet and pick it up at stores. … That's what the mall is. It constantly changes. It constantly churns. … If you come with a view that all forms of retail ought to be in the mall, it gives you a whole otherpoint.
4:54: Stefanek: (In response to its disposition strategy on the U.S. properties the firm is.) Most likely, this is it. If we sell 15, that leaves us with 40. … It's a good portfolio. There's plenty of demand. We can't sit here and say we're going to sell next year. I don't know where markets are going to be. … I can't tell you how it's pricing, but if we didn't think it was going well, we would have stopped it.