Westfield Retail : WRT Annual Meeting - Presentations

29 May 2014

The Manager

Company Announcements Office

ASX Limited

Level 4, Exchange Centre

20 Bridge Street

SYDNEY NSW 2000

Dear Sir/Madam

Please find attached copies of the Chairman's Address and Managing Director's Address to be presented at the 2014 Annual Meeting for Westfield Retail Trust commencing at 2.00pm (AEST).

Yours faithfully

Katherine Grace

Company Secretary

Encl.

Good afternoon and welcome to the meeting of members of Westfield Retail Trust 1 and
Westfield Retail Trust 2.
My name is Richard Warburton and I am the independent Chairman of RE1 Limited and RE2
Limited, the responsible entities of Westfield Retail Trust 1 and Westfield Retail Trust 2 respectively. I will refer to Westfield Retail Trust 1 and Westfield Retail Trust 2 throughout this meeting as the Trust. I have been appointed by RE1 Limited and RE2 Limited to chair this meeting.
I have been informed that a quorum for the meeting is present and I formally declare the meeting open.
Firstly I would like to introduce my fellow board members:

 Mr Andrew Harmos, a non-executive independent Director. Andrew is a founding partner of Harmos Horton Lusk, a specialist law firm based in Auckland, the Chairman of the New Zealand Stock Exchange and a director of AMP Life;

 Mr Laurence Brindle, a non-executive independent Director. Laurie has extensive experience in property investment, spending over 20 years with the Queensland Investment Corporation and he is currently the chairman of the National Storage REIT;

 Mr Michael Ihlein, a non-executive independent Director and Chair of the Audit and Risk Committee. Mike is currently a director of CSR Limited, Snowy Hydro Limited and Murray-Goulburn Co-operative Co Limited. He has a strong finance background having previously held senior executive roles at Coca-Cola Amatil and served as Chief Financial Officer and then Chief Executive Officer of Brambles Limited;

 Mr Domenic Panaccio, an executive member of the Board and the Managing Director of the Trust;

 Ms Sandra McPhee, a non-executive independent Director and Chair of the Remuneration Committee. Sandra is a highly experienced senior executive and non executive director currently serving on a number of listed boards including AGL Energy Limited, Fairfax Media Limited and Kathmandu Holdings Limited;

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 Mr Steven Lowy, a non-executive Director. Steven is a director and Co-Chief Executive of Westfield Group and brings over 20 years of strong retail experience and skills to the Board; and

 Mr Peter Allen, a non-executive Director. Peter is a director and Group Chief Financial Officer of Westfield Group. Having worked at Westfield for over 15 years he brings a wealth of knowledge and experience in the finance and retail sectors to the Board.

Also present today on stage is our Company Secretary and General Counsel Ms Katherine Grace, and in the audience we are joined by the Trust's Chief Financial Officer, Mr Brian Mackrill, the Trust's General Manager - Asset Management, Mr Roy Gruenpeter and our auditor, Ernst and Young.
Securityholders are invited today to raise any questions for management and the auditor. As set out in the Notice of Meeting, which I will take as read, there are five formal items of business for today's meeting. The first item of business is the ratification of the continuing appointment of Mr Andrew Harmos as a director. The remaining four items of business are in relation to the proposal to merge the Trust with Westfield Group's Australian and New Zealand business. Before we turn to those items Mr Domenic Panaccio, will address the meeting.
Firstly however, I would like to attend to some housekeeping issues.
Securityholders were invited to send in any questions that they wanted answered today as part of the meeting and Domenic and I will endeavour to address as many of the frequently raised topics as possible.
I understand that a representative from Computershare has run through operation of the handheld IML voting device which will be used in today's meeting. If you are still unsure about how to operate the device, please raise your hand and a representative from Computershare will be able to assist you.
Securityholders who hold an IML handheld device or a blue attendance card will have an opportunity to ask questions today. Only securityholders with an IML device are entitled to vote at today's meeting. Visitors with green attendance cards are not permitted to ask questions or vote during the meeting.
Where any proxy form appointing me on any resolution has not specified how the relevant votes are to be cast, I will cast them in favour of the resolution. This is in accordance with proxy forms sent to members.
All resolutions being put to this meeting will be determined by poll using the IML handheld devices. Computershare will act as scrutineer and will report the results of the vote to me. Following discussion of each resolution, time will be set aside for you to vote using the handheld devices. I will then close the poll for the resolution. Then the final results, which combine the proxy votes and the votes cast here today will appear on the screen. These results will be considered to be indicative of a final result pending an auditors or returning officers approval. The final results will be provided to the ASX after the meeting is closed.

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I would like to advise that today's meeting is being recorded. A copy of the addresses made by me and the Managing Director has been posted to the Westfield Retail Trust website and lodged with the ASX.
I would now like to hand over to the Trust's Managing Director, Mr Domenic Panaccio, who will discuss more operational matters of Westfield Retail Trust. Following Domenic's presentation we will turn to the formal items of business for today's meeting.

Thank you, Chairman.
Ladies and gentlemen, as the Managing Director of Westfield Retail Trust it also gives me great pleasure to welcome you to our third annual meeting. Westfield Retail Trust was formed in
2010. Our purpose is to provide investors the opportunity to invest in a portfolio of high quality shopping centres, through a vehicle with a strong balance sheet.
With its own board and corporate management team, and with Westfield Group as our joint venture partner and property manager, the Trust's focus is to maximise returns for our securityholders.
We do this by maximising the operating performance of our portfolio, continuing to invest in and enhance the quality of the shopping centres and capital management initiatives. For most of the time since the Trust's creation, the retail environment has been challenging, with low sales growth and deteriorating leasing metrics, although we have seen improvements in recent months. Yet despite these challenges, the quality of the portfolio and strength of the underlying cashflows are evident, with the Trust delivering on all of its financial forecasts during that time. Importantly the total return to our securityholders, the combination of capital growth and distributions, since the beginning of 2011, is a commendable 13% per annum compounding.
Our 46 shopping centres include 14 of Australia's top 20 centres by annual sales. These properties generate over $21 billion in retail sales annually, are over 99.5% leased and attract over 540 million customers visits each year.
These attributes place the Trust in a strong position to explore new opportunities for future growth. The proposed transaction to form Scentre Group is a unique opportunity to transform the Trust into an industry leading, vertically integrated, retail property group. By incorporating property management, development and construction capability with a leading portfolio of shopping centres, Scentre Group will have a superior platform for growth.
Turning to the Trust's performance in 2013, the Trust had another successful year generating a statutory profit of $777 million. This includes $164 million of property revaluations, mainly as a result of increases in rent. Funds from Operations were $596.8 million or 19.85 cents per security, representing growth of 2.5% over the prior year. The distribution grew by 5.9% to 19.85 cents per security.

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The recent increase in retail sales that we're seeing is encouraging. Since July last year we've experienced consistent growth in specialty retail sales in Australia, with the last 2 quarters showing stronger growth of 3% for the December quarter and 4.3% for the March quarter.
In particular, New South Wales, which represents 50% of the Trust's portfolio, performed strongly with specialty sales growth of 5.4% in the March quarter. The New Zealand portfolio has also shown improvement with specialty retail sales up 3.6% in the March quarter. These improvements have translated into positive trends across all of our operating metrics and today the Trust is well positioned to continue to deliver solid returns for our security holders.
Investing in our portfolio through redevelopments has always been a key growth strategy for the Trust. Redevelopment enhances the quality and market position of our properties, creates significant value and provides superior returns for our securityholders.
Over the past 3 years the Trust has invested over $1.8 billion in redevelopment projects across the portfolio. These include the successful completion of our flagship at Westfield Sydney, Westfield Fountain Gate in Victoria and Westfield Westlakes in South Australia and we are continuing to make excellent progress on the current redevelopments at Westfield Miranda in Sydney and Westfield Garden City in Queensland. These projects have all delivered or are forecast to deliver total returns of between 12 and 15%.
The quality of our portfolio has meant that it has been the location of choice for new market entrants in the retail space. In Australia, we saw the first Zara store at Westfield Sydney, The first Hollister stores at Westfield Doncaster and Westfield Bondi and soon we will see the first Sephora store open within our flagship centre on Pitt Street mall.
Technology plays an integral part in modern day retailing. The Trust, alongside Westfield Group as our joint venture partner and property manager, has worked diligently to keep pace with the rapid expansion and use of technology by both retailers and consumers.
From a capital management perspective the Trust has been active since its inception, with a number of key initiatives implemented over the last 3.5 years. We've actively pursued value enhancing strategies which have made a major contribution to the returns achieved for our securityholders.
These initiatives include,
- The distribution of over $1.6 billion to securityholders and the increase in the distribution payout to 100% of funds from operations;
- We announced a $300 million securities buyback program and bought back $226 million of securities at an average price of $3.02;
- We've sold assets to the value of $780 million and invested over $360 million towards
accretive acquisitions;
- We generated both significant capital appreciation and solid income yields on our completed developments; and
- We've raised more than $3.7 billion in bond and bank financings utilising the Trust's strong
A+ credit rating, the strongest of any Listed Australian Property Trust.

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So today Westfield Retail Trust is in an excellent position owning the best assets, with the best property manager, and with a strong balance sheet and with a focus on delivering long term returns for our securityholders.
The proposed merger with Westfield Group's Australian and New Zealand operations to form Scentre Group represents a significant opportunity for the Trust to further increase returns. The proposal is forecast to be 6.6% accretive to funds from operations and it will provide securityholders with an enhanced platform for future growth.
As I now hand back to the Chairman to convene the formal items of business for today's meeting, you will see a short video on some of our shopping centres and recent developments within our portfolio.
Thank you.

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