Scentre Group’s Shares Uplifted After Providing September Quarter Operating Update

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On 7 November 2018, Scentre Group (ASX: SCG) released its operating update for the September quarter, highlighting four recent redevelopment openings exceeding $1 billion and the addition of 106,000 sqm of space throughout the year as a significant investment in the scale and quality of its living centre portfolio. Following the release of this news, the share price of the company increased by 1.53 percent as on 7 November 2018.  

The company’s strategic objective is to own and operate the pre-eminent living centre portfolio in Australia & New Zealand and in the September quarter alone, the company has successfully opened more than $1 billion worth of redevelopment works across 4 Australian states. Redevelopments at Westfield Carousel, Westfield Kotara and Westfield Tea Tree Plaza, Westfield Coomera as well as Westfield Plenty Valley earlier in the year have collectively added 106,000 sqm to the portfolio. Each redevelopment has been designed to raise the customer experience, differentiate the product offering and maintain the company’s position as the premium location for its retailers to succeed.

In the September quarter, the company completed 2,083 Lease Deals. The total specialty in-store sales of the company were up by 1.8% for the 9 months and 2.0% for the year. The total stable portfolio in-store sales were up by 1.5% for the 9 months and 1.6% for the year.

The $350 million Westfield Carousel was opened in the month of August, delivering Perth’s premium retail and lifestyle destination. The centre attracted a number of first-to-WA retailers, the latest-format David Jones and 70 additional stores across the centre’s new fashion mall and open-air rooftop entertainment, dining and leisure precinct. The development added 27,500 sqm bringing the total GLA to 110,000 sqm.

In 2018, the company started the NZ$790m (SCG share: NZ$400m) redevelopment of Westfield Newmarket and completed $1.1bn (SCG share: $810m) of developments, adding more than 106,000 sqm of lettable area to the portfolio.

Westfield Kotara’s redevelopment (SCG share: $160m) opened its new Youth and Urban precinct in October. The final updates to the centre are going to be completed before the end of December. The completion of Westfield Coomera in the growth corridor of Queensland’s Gold Coast, marks the first greenfield development as Scentre Group. It is an example of the full evolution from shopping centre to living centre, with more than 40 percent of the centre dedicated to dining, leisure, entertainment and services.

The company has also reconfirmed its forecasted FFO growth of approximately 4% for FY 2018 and the distribution for FY 2018 is expected to be 22.16 cents per security, which is an increase of 2 percent over last year.

In the last six months, the share price of the company decreased by 4.15 percent as on 6 November 2018, and traded at a PE level of 4.890 x. SCG’s shares traded at $3.99 with a market capitalization of $20.9 billion as on 7 November 2018 (AEST 4:00 PM). The group has a dividend yield of 5.59%.


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