Scentre confirms forecast; Vicinity says ‘destination malls’ strategy bearing fruit

Retail landlord Scentre Group announced it still expects to see approximately 3 per cent growth in funds from operation (FFO) for the 12 months ending December 31, 2019, a year in which it will have completed a special project at Westfield Woden and the redevelopment of Westfield Newmarket.

The distribution for 2019 is forecast to be 22.60 cents per security, an increase of 2 per cent. Total specialty in-store sales were up 1.5 per cent for the quarter and 1.7 per cent for the year.

On a sales per square metre basis, total stable portfolio in-store sales were up 1.1 per cent for the quarter and 1.3 per cent for the year. Total specialty in-store sales were up 0.7 per cent for the quarter and 1.3 per cent for the year.

The group recently opened the Bradley Street Dining precinct special project at Westfield Woden, bringing six new restaurants to South Canberra as part of a $21 million redevelopment.

The company also announced its Westfield Newmarket redevelopment is progressing well and will have staged openings commencing in the early part of the third quarter 2019.

The shopping centre owner has outlined that 99.3 per cent of its portfolio has been leased.

Company CEO Peter Allen said customer visitation continued to grow during the quarter underpinned by its strong focus on customer experience.

Vicinity Centres has also posted better sales this week, saying its strategy to create destination malls, look for mixed-use redevelopment opportunities, divest some assets and focus on its higher performing assets is bearing fruit.

“The repositioning of the portfolio toward approximately 50 market-leading destinations continues to be progressed and the strong operating metrics for this group of assets demonstrate Vicinity’s strategy will continue to unlock value and deliver sustainable growth for securityholders,” said Grant Kelley, Vicinity Centres CEO and managing director.

Within its destination portfolio, the retail landlord posted a 3.9 per cent sales growth.

The portfolio of 50 destination malls mentioned include the country’s largest mall, Chadstone, which Vicinity co-owns with its largest shareholder John Gandel.

Kelley said Vicinity has made significant progress on its live developments at Chadstone, with construction on the hotel and its link to the centre progressing well, while premium valet parking commenced operations in April 2019.

He added that stage four of the major redevelopment at The Glen remains on track to open in August 2019.

The company posted 3.3 per cent growth of specialty store and mini majors moving annual turnover and said FY19 funds from operations per security guidance remains 18.0 to 18.2 cents and the distribution payout ratio is expected to be the upper end of the target range of 95 per cent to 100 per cent of adjusted FFO.

“We acknowledge that the retail environment continues to evolve however Vicinity is well-placed to respond to changing market conditions,” Kelley said. “Vicinity’s strength is underpinned by our points of differentiation.”

Property group Mirvac has announced it is still expecting earnings growth of 3 per cent to 4 per cent for FY19 with its strong office rents offsetting it weaker residential sales.

The company said its retail occupancy remains high at 99.2 per cent.

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