SCentre Welcomes back Visitors and Sales Growth

13 May 2022

Scentre Group has announced improved sales growth and customer visitations for the March Quarter, helping to maintain occupancy and rental growth.

Scentre Group CEO Peter Allen said: “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.

“Customer visitation is 12% higher than 2021 or 16% higher when excluding CBD centres. We are seeing week-on-week improvement across our suburban and CBD based centres.

“Demand from existing and new businesses who want to expand their physical store network continues.

“Our business partners are taking advantage of the benefits of well-located physical store networks in our destinations with sales exceeding pre-pandemic levels. Comparable majors and specialty sales were 11.2% higher in March 2022 compared to 2019 and for the quarter were 7.1% higher.

“Portfolio occupancy remains strong at 98.7% at the end of March 2022. 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.

“Gross rent collection during the four-month period to 30 April 2022 was $800 million.

“During the three months to 31 March 2022, the Group completed 536 lease deals, including 237 new merchants, welcoming 50 new brands to the portfolio.

SCentre did no reveal any details on leasing spreads or incentive levels. Other managers are reporting negative leasing spreads and higher incentives, though not as challenging as 12 months ago.

SCentre said their Westfield Direct, aggregated ‘Click and Collect’ service, 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.

Westfield Plus, the membership platform, has grown its membership to 2.5 million.

SCentre said “The combination of these two initiatives provides us with first party data, creating opportunities to learn more about the customer and deliver what they want.

The Group continues to make significant progress on its responsible business initiatives across community, people, environment, and economic performance. Our 2021 Responsible Business Report and 2021 Modern Slavery Statement were released on 17 March 2022.

The $355 million investment in Westfield Knox, Melbourne is progressing well with demolition complete, construction of the new structure underway, strong pre-leasing and in line with budget.

“During the quarter, we opened the $55 million rooftop entertainment, leisure and dining precinct at Westfield Mt Druitt. During the first month of trading, customer visitation and dwell time has significantly increased, with an overall increase of 56% compared to the same period last year.”

The design and construction on behalf of Cbus Property at 101 Castlereagh St in Sydney’s CBD is well advanced with commencement of the construction of the new structure for the residential and commercial tower.

Scentre Group CFO and CEO-Elect Elliott Rusanow said “The Group has restructured its interest rate hedging profile to increase hedging in 2023 and 2024. Interest rate hedging at January 2023 has been increased from 50% to approximately 65%, with a weighted average rate of 1.87%. At January 2024 interest rate hedging has increased from 40% to approximately 50% with a weighted average rate of 1.79%.”

CEO Peter Allen said: “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.

“The underlying structure of our revenue with inflation linked leases, provides long-term growth for our securityholders.

“In light of the improving conditions and strong performance of our business, earnings are expected to grow in excess of 5.3% in 2022.”

Subject to no material change in conditions, the Group expects to distribute at least 15.0 cents per security for 2022, representing at least 5.3% growth.