The world's biggest shopping centre landlord plunged to an A$925m (£473m) pre-tax loss after writing down the value of its properties by A$2.5bn.
The writedown took the gloss off a positive set of results from Westfield, best known in Britain for its enormous Westfield London site at White City, which met analysts' expectations.
The Australian company said its operating profits actually increased by 12 per cent to A$1bn, although it plans to cut its "payout ratio" – or dividend – from August 2010 to strengthen its balance sheet. This should save the company as much as A$500m a year, which will be used to fuel investments.
Britain was by some way the group's worst-performing region, with operating income falling by 4.1 per cent, compared with a 0.6 per cent fall in the US. That was offset, however, by the Australian and New Zealand operations, which grew operating income by 6.2 per cent.
Westfield described the UK market as "challenging" but did report robust growth at Westfield London, where sales rose by 4.8 per cent despite the impact of the recession on British retailing. The company plans to open a second major development in East London – Westfield East – next to the site of the Olympic park in Stratford.
But The Independent revealed in July that the £1.5bn flagship development had signed up just three retailers out of 300 units less than two years before the centre is planned to open.
However, Westfield's joint managing director Stephen Lowy said yesterday: "Our development activity remains concentrated in the Sydney central business district and Stratford, the gateway to the London 2012 Olympics. These two projects are of the highest quality and are expected to create significant long-term value."
He added: "Redevelopment remains a major component of our long-term value creation activity and we will continue to invest in the development of our high-quality opportunities in order to be in a position to commence these projects when conditions are appropriate."
In total Westfield operates 119 shopping centres across Britain, the US, Australia and New Zealand. The company raised A$2.9bn by selling new shares in February at A$10.50 a share. The stock has since risen 19 per cent to A$12.45, but that lags behind a 26 per cent gain in the wider market.
Westfield's shares have been held back by fears that it might need to raise more equity in the coming months.Reuse content