Macquarie downgrades Westfield profit expectations
International retail landlord Westfield Corporation has had its profit expectations downgraded by Macquarie because of the current volatile British and US retail markets and fluctuating currencies.
The investment bank says it believes Westfield’s current first-half funds from operations will now come in at US16.9c per share, down 7.7% on the same time last year.
The company’s US portfolio, which makes up the bulk of its holdings, is likely to only grow in value by 3.1%, according to Macquarie analysts.
Westfield is one of the main Australian companies likely to suffer the most from Brexit, because of its freehold and retail businesses in Britain and Europe.
Transformed: Westfield moves with the times
Australian companies operating in the domestic market have been tipped to benefit from Brexit, as continental European investors look to strong international real estate and property markets outside the troubled region. Office rents in London’s powerful City district have been predicted to fall by at least 20% and some economics agencies have tipped that up to 40,000 jobs could be cut in the next few months.
From a European perspective, Macquarie says it forecasts Westfield’s funds from operations of US33.4c per share for the 2016 calendar year, down 11% on last year. Macquarie now rates Westfield as neutral compared with its former outperform recommendation.
“We remain attracted to strong expected returns from the $US6.5 billion ($8.6 billion) development pipeline and the exposure to a very high quality portfolio,” Macquarie analysts say.
“There is potential for corporation risk and a restructure in the medium term … also there’s a potential downside risk to earnings factoring in weaker US and UK retail conditions and a softer GBP/USD.”
Westfield shares closed down 1c on Monday to $10.85.
