A quarterly report from a leading UK shopping centre operator and property group, Liberty International, has called into question Westfield’s optimism about the current state of the market and property values in Britain.

Westfield was upbeat and confident in its quarterly market update yesterday, although noting a slowing in sales momentum at its Australian malls in March, while it was upbeat about the UK where it is spending heavily to establish a presence in London and in the regions.

However Liberty’s quarterly update, released in London overnight, revealed the write down of 345 million pounds, or well over $A700 million in the value of its 8.34 billion pounds (more than $A17 billion) of retail holdings in Britain in the first three months of 2008.

Liberty has now cut some 600 million pounds, or more than $A1.2 billion from the value of its UK holdings since last October and it’s not that there’s a drop in tenancies at Liberty’s centres in the UK: it says it has 98.5% occupancy, down 0.2% on a year ago.

David Fischel, Liberty’s chief executive, was quoted as saying: “We are probably back [in values] to where we were two years ago.”

Another big UK property and shopping centre group, British Land, has already cut the value of some of its holdings by around 10%, including a shopping centre at Sheffield in the north of the country where Westfield’s Derby Centre is open.

Westfield said yesterday that its major project at Westfield London (costing 1.3 billion pounds, or over $A3.2 billion) will open on October 30, with the cinema and leisure component scheduled to open in the 2nd quarter of 2009.

“Overall, we are very excited about this project and believe that on completion Westfield London will be one of the world’s leading shopping centres and one of the flagships of the Group’s portfolio.

“During this year, we expect to commence over $4.0 billion of new projects, including Stratford City in East London, at the site of the 2012 London Olympics, in the next few months.”

The question is: if Liberty and British Land are forced to write down the value of their shopping centres, and have been doing so since the last quarter of 2007, why is Westfield so optimistic?

Peter Fray

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