This article is from the Australian Property Journal archive
OVER the first quarter, Scentre Group (ASX: SCG) has reaped the rewards of the ongoing recovery of shopping centres, with customers again showing up to physical stores.
Customer visitation across SCG’s portfolio was up 12% in the first quarter on 2021 levels, or up 16% when excluding CBD assets.
“I am very pleased with the group’s operating performance for the first quarter. We have continued to drive more visitation and saw a significant increase in sales for our business partners, above pre-pandemic levels,” said Peter Allen, CEO of Scentre Group.
Comparable majors and specialty stores were up 11.2% in March 2022 compared to 2019 pre-pandemic levels and up 7.1% for the quarter.
SCG’s portfolio occupancy remained at 98.7%, as of the end of March 2022, while rent collection in the four months to 30 April 2022 was at $800 million.
“Approximately 80% of our specialty leases are inflation linked with average annual rent escalations of CPI + 2%, the remaining 20% of specialty leases have fixed annual rent escalations with an average escalation of 4%. Specialty rent represents more than 90% of net operating income,” added Allen.
Over the quarter the group completed 536 lease deals, which comprised 237 new merchants and saw 50 new brands added to the portfolio.
“Westfield Direct, our aggregated ‘Click and Collect’ service, has experienced continued growth in customer and business engagement. Westfield Direct has over 200 sellers and more than 220,000 products. In the six months since launch, customers have placed over 40,000 orders, including more than 21,000 orders in the three months to 31 March 2022,” said Allen.
While Scentre Group’s Westfield Plus membership platform also saw its membership numbers grow to 2.5 million.
“The group has restructured its interest rate hedging profile to increase hedging in 2023 and 2024,” said Elliott Rusanow, CFO and CEO-elect at Scentre Group.
The group’s interest rate hedging from January 2023 has been upped from 50% too around 65%, with a weighted average weight of 1.87%.
While interest rate hedging at January 2024 has been increased from 40% to around 50%, with a weighted average rate of 1.79%.
“The underlying structure of our revenue with inflation linked leases, provides long-term growth for our security holders,” said Allen.
SCG forecasts its earnings to grow by at least 5.3% in 2022, with distributions expected to be at least 15.0 cents per security, for a 5.3% increase.
“We are confident about the future of our business, the sustained economic recovery across Australia and New Zealand and people’s ongoing desire to gather in our destinations, socialising with each other and interacting with businesses and brands across our platform,” concluded Allen.
