Scentre Group today released its results for the six months to 30 June 2021 and along with it much needed optimism for the sector.
SCentre’s assessment of the last 12 months is that once COVID restrictions are removed, customer visitation and sales will exceed pre-locked down numbers. In the Half year to June 2021, (largely unaffected by restrictions), the group recorded $11.1bn in sales (excluding Cinemas and Travel) compared to $11.0bn in the same period in 2019.
SCentre confirmed an Operating Profit for the 6 month period of $460.1 million (8.88 cents per security), up 28% on the prior corresponding period (pcp) and Funds From Operations (FFO) of $463.4 million (8.94 cents per security).
Scentre Group CEO Peter Allen said: “We have delivered strong operating performance even with a number of government restrictions in place. In those locations impacted less by lockdowns, we have seen trading conditions better than those experienced in the first half of 2019. We collected $1.2 billion of gross rent during the first half of 2021, representing an increase of 37% or $325 million compared to the first half of 2020. Annual sales through our platform were $23.4 billion. During the first half of 2021, total sales excluding cinemas and travel exceeded total sales in the first half of 2019, even though there were a number of government lockdowns during the period.
“Visitation rapidly rebounded when restrictions were eased. Customers want to return to our Westfield Living Centres as what we offer is integral to their lives.
During the six-month period, the Group achieved gross cash inflow of $1,383.9 million and a net operating cash surplus (after interest, overheads and tax) of $487.7 million enabling Scentre to declare a distribution for the six-month period of 7.00 cents per security. Statutory Profit for the six- month period was $400.4 million.
Peter Allen said, “We are focused on long term growth, leveraging the strength of our core business by becoming essential to people, communities and the businesses that interact with them. We want to be the first choice for where people spend their time outside of home and work. All Westfield Living Centres have remained open during the period, operating with COVID Safe protocols and in line with the latest health and government advice. We are facilitating community access to COVID-19 vaccinations across all of our Westfield centres.
“We are focused on our customer strategy and continue to make significant progress on our customer experience initiatives. This includes our membership program Westfield Plus which has more than 1.9 million members, increasing by 1.4 million since June last year. Last year we successfully piloted an aggregated ‘click and collect’ service to facilitate our business partners connecting with customers during periods of government restrictions. The learnings from this formed the basis of an aggregated ‘click and collect’ platform due for launch in the second half of this year. This will extend the Westfield in-centre experience and enable customers to have greater accessibility to our business partners, wherever they are, across multi-channels.
SCentre completed 1,515 lease deals during the half, including 619 new merchants keeping occupancy at 98.5% as at 30 June 2021.
During the period we continued to support SME retailers to mitigate the short term cashflow impact on their business during the pandemic through appropriate rent deferral.
Mr Allen said: “The first six months has highlighted the fundamental strength of our business and its ability to rebound when restrictions ease. Whilst we are currently operating through a period of government restrictions in key markets, we are confident in the ability of our business to perform. We are well-positioned to come through this period strongly, supporting our customers and continuing to deliver long-term growth for our securityholders.
“The Group continues to target a distribution of 14 cents per security for the year to 31 December 2021. This is based on the assumption that the current government restrictions substantially ease by the end of October 2021.”
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Key financial and operational highlights for the period are:
Financial highlights:
- Operating earnings (FFO) of $463.4 million, or 8.94cpu, up 28% on the prior corresponding period (pcp)
- Statutory profit of $400.4 million
- Distributions of 7cpu
- NTA of $4.27 up 0.2% from $4.36 at 31 December 2020
Operating highlights:
- Total sales through the platform were $11.2 billion
- Total sales excluding cinemas and travel exceeded the first half of 2019
- 1,515 new leasing deals including 619 new merchant deals
- occupancy of 98.5%
- Scentre Group maintains “A” grade credit ratings by S&P, Fitch and Moody’s.
Portfolio update
Scentre have not provided detailed commentary on their 6 monthly results.
SCentre advise that work continues on behalf of Cbus for the construction of the residential and office tower at 101 Castlereagh St Sydney with completion expected in 2023. The $55 million entertainment, leisure and dining precinct development at Westfield Mt Druitt is progressing well and expected to open in Q1 2022.
The Group has available liquidity of $5.7 billion, sufficient to cover all debt maturities to early 2024. Interest cover for the period was 3.3 times and balance sheet gearing at 30 June 2021 was 27.9%.
Valuations:
Valuations were largely unchanged over the 6 month period with cap rates remaining broadly in line with the previous period.
FY22 Guidance
The Group continues to target a distribution of 14 cents per security for the year to 31 December 2021. This is based on the assumption that the current government restrictions substantially ease by the end of October 2021.
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