Scentre reaffirms guidance after “pleasing” half

Tag Heuer WestfieldRetail landlord, Scentre Group, has today reaffirmed its full year guidance of 4.24 earnings growth, after booking funds from operations (“FFO”) of $638 million for the half.

For the six months to 30 June 2017, Scentre’s profit was $1.4 billion, including $929 million of revaluation gains driven primarily through continued growth in operating income across the portfolio and the completion of its Westfield Chermside redevelopment.

During the half, Scentre Group commenced $900 million (SCG share: $625 million) in developments with expected total returns in excess of 15 per cent.

“Scentre Group is very pleased with these first half results, which highlight strong operating performance and reflect the benefit of our strategic focus on delivering long-term sustainable growth through our ability to curate an exceptional product mix and deliver extraordinary retail, lifestyle and entertainment experiences for our customers,” said Peter Allen, CEO of Scentre Group.

The property firm operates 39 Westfield shopping centres, including 16 of the top 25 performing centres in Australia with assets under management of $47.4 billion.

Comparable net operating income increased 2.6 per cent for the six months, which Scentre said was driven primarily by contractual rent increases.

Comparable specialty sales in the portfolio grew 2 per cent for the twelve months and 1.5 per cent for the six months to 30 June 2017, with average specialty sales increasing to $11,250 per square metre. Strong sales growth was seen in the food retail, food dining, technology & appliances and retail services categories.

“The portfolio’s high specialty sales productivity ensures strong demand from retailers wanting to generate growth in sales and customer engagement,” said Allen.

Westfield’s portfolio remains over 99.5 per cent leased.

During the half, the Group commenced $900 million (SCG share: $625 million) of developments including projects at Westfield Carousel in Perth, Westfield Plenty Valley in Melbourne and Westfield Coomera on Queensland’s Gold Coast.

“Our announcement today of the $470 million (SCG share: $235 million) development at Westfield Coomera, our first greenfield development in more than 12 years, reflects our commitment to growing the business, improving the quality of our portfolio and meeting customer and retailer needs,” said Allen.

“The new 59,000 square metre regional centre will comprise Coles and Woolworths supermarkets, an Event Cinemas complex including Gold Class, Kmart and Target discount department stores, and 140 specialty stores including an alfresco leisure and dining precinct.”

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