Scentre Group's Positive Momentum with Increased Foot Traffic and Sales Growth

Highlights

• Scentre Group sees growth in customer visits and partner sales across Australia and New Zealand.
• Portfolio occupancy reached a robust 99.4%, with consistent positive leasing spreads.
• Strategic developments in key locations and effective refinancing enhance growth trajectory.

Scentre Group (ASX:SCG), a major retail property player operating 42 Westfield shopping centers across Australia and New Zealand, has seen promising growth in customer engagement and partner sales. For the year up to early November 2024, Scentre Group reported 429 million customer visits, a 2.1% rise compared to the same period last year. This increase reflects the resilience of in-person retail and the strong appeal of Westfield centers. Additionally, business partner sales for the group reached AUD 20.2 billion, a 2.3% increase year-on-year, with annual sales setting a new record of AUD 28.8 billion as of September 30, 2024.

Occupancy rates across Scentre Group’s portfolio remain high, with an impressive 99.4% occupancy as of the latest data—up by 30 basis points from the previous year. This trend is bolstered by positive leasing spreads, averaging +1.7% over the first nine months of 2024. Specialty rent escalations are also on the rise, averaging +5.5%, a positive sign of robust demand for retail space in Scentre’s properties. The group’s gross rental collection also saw an increase, reaching AUD 2.073 billion, marking a gain of AUD 78 million compared to 2023.

A key area of focus for Scentre Group has been its AUD 4 billion development pipeline, which includes ambitious projects in major cities. These developments aim to enhance the retail experience and increase customer convenience, with expansions underway at Westfield Sydney and reconfiguration efforts at Westfield Bondi Junction and Southland in Melbourne. Such investments in high-profile locations are intended to secure long-term growth by adapting to evolving consumer needs and modern retail trends.

In addition to expansion efforts, Scentre Group has taken proactive steps in financial management. In September, the group issued AUD 900 million in subordinated notes, refinancing USD 656 million of existing debt. This move is expected to reduce overall costs and strengthen financial stability. Further expanding its portfolio, Scentre co-established the West Lakes Opportunity Trust, investing in a 50% stake in Westfield West Lakes in South Australia, valued at AUD 175 million.

Scentre Group has reaffirmed its funds from operations (FFO) forecast for 2024, projecting between 21.75 to 22.25 cents per security, and anticipates a distribution growth of at least 3.6%. This translates to a minimum projected distribution of 17.20 cents per security, showcasing Scentre’s commitment to stable returns for security holders.