Westfield owner reports hefty profit rise

Tag Heuer WestfieldRetail landlord Scentre Group has recorded a 41 per cent increase in its 2017 statutory profit to $4.2 billion, driven by rising footfall at shopping centres and retailer demand.

Scentre said funds from operations (FFO) were up 4.25 per cent to $1.290 billion.

“Our strong NOI [net operating income] growth was underpinned by growth in customer visitation with retailer demand maintaining occupancy greater than 99.5 per cent,” said Scentre Group CEO Peter Allen.

Scentre forecasts FFO growth for the 12 months ending 31 December 2018 of approximately 4.0 per cent.

Since the establishment of Scentre Group, the Group has grown the value of its portfolio by more than 30 per cent to $36.2 billion. Scentre Group has a strong financial position with total assets of $37.5 billion, gearing of 32.1 per cent and liquidity of $2.7 billion as at 31 December 2017.

Busy year

During the year Scentre leased 1,258 stores including 289 retail brands that are new to its portfolio and partnered with 592 existing retailers to grow their businesses through the opening of an additional 943 stores.

Scentre Group completed lease deals across all categories including 31 major stores with average tenure of 15 years, and 2,466 specialty lease deals covering an aggregate of more than 345,000 square metres of space.

Comparable net operating income increased 2.75 per cent for the 12 months, driven primarily by contracted annual rent escalations.

Scentre began construction of several projects during the year including the over $1.1 billion (SCG share: $810 million) of developments including projects at Westfield Carousel in Perth, Westfield Plenty Valley in Melbourne, Westfield Kotara in Newcastle and Westfield Coomera on Queensland’s Gold Coast.

Coomera is Scentre’s first greenfield development in over 12 years.

“The key to the success of our developments is creating places where people want to go, curating a diverse and engaging product mix and providing exceptional customer experiences making it easy to visit, engage, be entertained and shop,” said Allen.

“These ingredients are vital to driving income growth and long-term risk adjusted total returns”.

Scentre recently announced the NZ$790 million (SCG share: NZ$400 million) redevelopment of Westfield Newmarket, which will feature the first David Jones in Auckland, a new Farmers department store and Countdown supermarket, which will both bring their newest format stores to the project.

“We are looking forward to opening 106,000 square metres of new space in 2018 and will continue to actively seek opportunities to grow the business either through investment in redevelopments, the creation of new income opportunities or acquiring new development opportunities such as the exciting opportunity at Central Barangaroo where Scentre Group will further expand its footprint in the CBD of Sydney,” said Allen.

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