Westfield group's ceo discusses q3 2011 results
Australian eastern daylight time.[ Instructions] I would now like to advise that today's conference is being recorded.I would now like to introduce the presenter for today,Mr.Stevens lowy.Mr.Lowy, please go ahead.
The september quarter has been a very exciting period for the group with the immensely successful opening on september 13 of westfield stratford city, the largest urban shopping center in europe, and the recent completion of the gbp 1.75 billion joint venture of the center with APG and CPP, the proposed $1.3 billion joint venture on the development of the retail component of the World Trade Center in New York, our expansion into Newmarket with our entry into Brazil and acquisition in Milan, with good progress to date on integrating these new opportunities into our group, as well as the sale of our 50% interest in Cairns Central in Queensland, $261 million on a cap rate of 5.2% representing a 16% premium to book value and an unlevered internal rate of return of 15.2% on the group's investments.
This all bodes very well for asset value particularly considering this shopping center was ranked 33rd out about 44 centers in our australian portfolio.We also continue to pursue our strategy of disposing of noncore assets across the group.
Now turning to the operations.
Overall, our business continues to be in solid shape.In australia, total sales for the rolling 12 months were $21.5 billion, up 0.1%.For the 9 months to september, comparable specialty retail sales were up 1.1%.From a regional perspective, queensland and victoria posted strong sales results relative to performances in new south wales and western australia.For the year to date, we have seen a shift in market share away from the majors, particularly the department stores and the discount department stores.The productivity of our portfolio continues to be very high with specialty sales of over $9, 700 a square meter.This is up 1.1% on a comparable basis to the same time last year and takes into account sales for the 3 month period to September, which were down 1.4% compared to the same period last year.
As we head into the christmas period, the recent announcement regarding a reduction in official interest rate in australia can only be seen as a positive for consumer sentiment.In australia, comparable specialty sales for the year to date was up 0.7% and flat for the quarter.This excludes our center at riccarton and christchurch, which i'm pleased to report is now trading very strongly since the earthquake late last year and earlier this year.
Average specialty rents for the portfolio grew by 3.8% from September last year.For the 9 months to september, new leases in australia were signed at rents 1% higher than expiring rent.As rents are also inflation indexed in australia excuse me, as rents are also inflation indexed every year, this can be seen as a solid result in this environment.Earlier in the year, some high profile administration occurred, including borders, angus robertson in colorado, where around 80 stores closed.In a matter of months, almost all of these lease up is now complete.This clearly highlights the strength of our portfolio and the underlying demand for space.
If we were to exclude the impact of these administration, then new leases in australia for the 9 months were signed at rents 1.9% higher than expiring rents, which includes growth on retailers renewing their leases at 3.2%.
At the end of september, average specialty occupancy cost for the portfolio was 18.6%.Whilst market sentiment towards retail in australia has been subdued over the course of this year, our portfolio remains in very good shape with near full occupancy, positive rent growth on renewal, high specialty sales productivity and solid demand for space in both existing centers and new development, such as fountain gate and carindale in australia.Given this consistent performance of the portfolio for the 9 months, we expect to be at the higher end of our comparable noi growth forecast for this year of around 4%.
Now turning michael kors gia totes to the united states portfolio.
Specialty retail sales for the rolling 12 month to september totaled $6.9 billion.Specialty sales were $433 per square foot.This is up 5.9% for the 9 months.Particularly pleasing this quarter was the continuation of strong sales performance across all categories, and we have seen this trend continue into october.
From a center perspective, our top tier centers continue to post strong sales growth above the portfolio average, where our top 20 centers are now achieving specialty sales of $566 a square foot.
With the continuing strong growth in sales, specialty occupancy cost at september 30 have fallen another 20 basis points to 15.5%.At the end of september, the portfolio was 92.5% leased, ahead of the level of June and 80 basis points lower than September last year.
This movement from september last year has been impacted by the closure of borders, which reduced our overall occupancy by 140 basis points.I'm pleased to report that half of this space has now been leased and committed.
On the leasing front, we have been incredibly active, completing over 1, 300 deals representing around 3.4 million square feet of space, being some 50% more area than we leased in the 9 months last year.This increased volume is not at the expense of pricing as we remain very focused on rental growth.In line with this, we have seen a 3.3% increase in average specialty store rent for the portfolio, now at $60.48 per square foot.
Specialty shop total rents achieved for all deals represented growth over expiring rent of around 10%.We also continue our focus on adding a diverse range of products, services and food to our mall.As part of this, we are reconfiguring department store sites that we acquired several years ago.Maxx, costco, wal mart, best buy, forever 21 and also a number of grocers, fitness centers and theaters.
As a result of this strategic re merchandising effort, we believe this will drive approximately $800 million to $1 billion of incremental sales in our centers through a combination of higher productive new retailers, as well as increased traffic and sales michael kors bracelets across the entire center.At this stage, we expect to be at the higher end of our comparable noi growth forecast range for the year of 1% to 2%.
Now turning to united kingdom.
Our key highlight this quarter was the hugely successful launch of our major project at stratford city in east london on september 13.This, the largest urban center in europe, is anchored by flagship john lewis, marks spencer and waitrose stores, vue cinema, aspers casino, which will open in december, and over 300 shops.Westfield stratford city represents the latest evolution of our thinking and skills in design, retail and leisure mix, technology and sustainability.And the consumer has embraced the project enthusiastically.We are immensely proud of this world class shopping center, which was delivered on time on budget and over 95% leased at opening.The launch highlighted the strength of the transport infrastructure, particularly the rail network, which performed superbly and augurs well for the huge crowd that are expected in the lead up to the london 2012 olympics game in only 8 months' time.
In the 8 weeks since the opening, an astounding michael kors handbags australia online 6.5 million customers have visited the center with more than 1 million visitors in the first week, by far, the biggest center opening in our company's history.The visitation is well ahead of the same opening period at westfield london, and i'm pleased to report that sales in this short period are also ahead of expectation.By javelin group, one of the country's major independent retail research houses.
Some recent releasing at the center has seen the introduction of new global retailers, which is urban outfitters, banana republic, coach, michael kors, dkny, aquascutum, juicy couture and true religion.This reflects a further strengthening of our mix and demand for space at the center with the center now 100% leased.Portfolio was 98.5% leased.This is consistent with the level of june.Portfolio net operating income growth forecast for the year remains in the range of 7% to 8%.
Since announcing our entry into this new market, we've been very active in establishing and integrating our team.And australian operations, respectively.
At this stage, we expect to incorporate the brazilian operating performance into the group numbers in our first quarter next year.Before turning to our global development activity, i'll briefly comment on our global digital strategy.
During the period, we continue to focus on developing web, mobile and social channels designed to attract and engage shoppers online and drive them into our centers.As part of this strategy, on the 1st of november, we launched the first stage of our global mobile website platform allowing shoppers to search and find our centers, retailers and office from wherever they are.
In australia, we continue to build our online transactional platform enabling westfield to deliver a multichannel retail experience by providing shoppers with the ability to shop at westfield, both on and offline.We've grown our online stores to over 160 and have recently opened our australian designer collection.In the coming months, we will be launching several important new initiatives, including an exclusive online shopping and flight rewards partnership with velocity, virgin australia's frequent flyer program, online redemption of the westfield gift card, and in the first quarter of next year, an enhanced mobile website platform with transactional capability.