This article is from the Australian Property Journal archive
WESTFIELD malls landlord Scentre Group has plunged to a $3.73 billion full year loss, as the pandemic smashed the retail market and wiped $4.25 billion from the value of its portfolio.
The group’s operating profit for 2020 was $763.4 million, at 14.71 cents per security, and was down from 2019’s $1.275 billion.
Funds from operations was $766.1 million, at 14.76 cps, down from $1.332 billion. Gross operating cash inflow was $2.357 billion.
Scentre withheld distributions in the first half and paid out 7 cents per security in the final half. However, the group expects to distribute at least 14 cps for 2021, and CEO Peter Allen said the distribution is expected to continue to grow in future years.
Leasing spreads have dropped by more than 13%. Property revenue was down to $2.275 billion, from $2.455 billion. The group collected $2.059 billion in gross rent collections, including $641 million during in the final quarter – which saw Victoria emerged from a second lockdown – equivalent to 100% of gross billings.
Allen said the group continues to make progress on COVID-related deal negotiations, having reached commercial arrangements with 3,398 of its 3,600 retail partners, including 2,456 SME retailers in relation to the Code of Conduct.
“We led the industry in the development of the Code of Conduct, supporting small to medium sized businesses across the sector,” Allen said. The group shuttered Mosaic Brands out of 129 of its stores due to a rental dispute during the winter, and Strandbags out of a further 38 shops.
Scentre came to a confidential agreement with Mosaic that allowed Noni B, Rivers and Katies stores within Westfield centres to reopen following a rent payment stoush, and a separate deal with Strandbags.
Occupancy at Westfield shopping centres was 98.5%. There were 2,625 lease deals during the year, including 848 new merchants.
Allen said the structure of leases has not changed and remains based on the mutual agreement to pay a fixed base rent.
“2020 was a challenging year and I am proud of how our people adapted to the conditions, leading the industry and our business. We were proactive and deliberate in the decisions we made,” he said.
“We trialled a number of initiatives, such as aggregated ‘click and collect’ that facilitated our retail partners connecting with customers during periods of government restrictions. The learnings form the basis for strategic initiatives we are pursuing.
“Our capital management actions were focused on strengthening our financial position and preserving value for the long term by not raising equity from our securityholders.”
Scentre did not receive any financial support from the Australian or New Zealand governments, including the JobKeeper program.
During the year, the group completed a new dining precinct at Westfield Doncaster, introducing 14 new restaurants to the centre, as well as the $50 million upgrade of Westfield Carindale the included the introduction of a Kmart store. Projects at Westfield Belconnen and Westfield Hornsby were also completed.
Scentre Group was appointed in December by Cbus Property to design and construct the residential and commercial tower on the site of the former David Jones menswear store on the corner of Market and Castlereagh streets in Sydney’s CBD.
Some $10.1 billion of new and extended funding was executed during the year, including $3.6 billion of bank facilities, $2.4 billion of long-term bonds and $4.1 billion of subordinated notes. It now has available liquidity of $6.9 billion.
Scentre maintains A-grade credit ratings by S&P, Fitch and Moody’s.
