Scentre Group (ASX: SCG) today released its results for the 12 months to 31 December 2018, with Funds From Operations (“FFO”) of $1.34 billion representing 25.24 cents per security, up 3.9% and a distribution of 22.16 cents per security, up 2%. Scentre Group’s commitment to the living centres platform strategy and their development pipeline to activate the vision has delivered strong results across their $39.1 billion portfolio. With occupancy at 99.3% it is one of the strongest shopping centre portfolios in the country. Scentre Group have $54.2 billion worth of assets under management and has a strong financial position with gearing at period end of 33.9%.
Scentre Group CEO Peter Allen said: “We are very pleased to deliver these strong results, in line with our forecast. Our results demonstrate the quality of our platform and the implementation of our strategy, which continues to generate long-term earnings growth and value for our securityholders.
“Our 41 Westfield living centres are an integral part of the Australian and New Zealand communities they serve, and today’s results demonstrate the strength and resilience of our business through economic cycles. During 2018, annual customer visitation increased by 5 million to 535 million and annual in-store sales increased by $1 billion to $24 billion. Occupancy across our portfolio continues to be greater than 99% as it has been for more than 20 years.” Allen said
“We continue to innovate and adapt our business to changing customer expectations. More than 35% of the stores across our platform offer experiences like dining, entertainment, health, fitness and beauty services, which can only be consumed on-site. Across the five developments we opened during the year, more than half of the new stores offer experiences.
“During the year we introduced 437 new brands and 317 existing brands grew their store network with us. This demonstrates the importance of physical stores in attracting and retaining customers, building brand advocacy and influencing sales both in-store and on-line.” Allen continued
Westfield Carousel celebrating the opening of its development
In 2018, Scentre Group successfully completed over $1.1 billion (SCG share: $810 million) of developments which are earnings accretive and deliver attractive long-term returns. Collectively these developments added more than 106,000m2 to the portfolio across projects at Westfield Plenty Valley in Melbourne, Westfield Carousel in Perth, Westfield Tea Tree Plaza in Adelaide, Westfield Kotara in Newcastle and Westfield Coomera on Queensland’s Gold Coast – Scentre Group’s first greenfield living centre. These developments elevated the customer experience, differentiated our product and service offering and enhanced our premium platform for our brand partners.
Westfield Coomera’s opening on the Gold Coast was a exemplary example of this, with the recent opening also of The Park Coomera, delivering new experiences for northern Gold Coast locals.
The Park, Westfield Coomera
Scentre Group commenced the NZ$790 million (SCG share: NZ$400 million) redevelopment of Westfield Newmarket in Auckland during the period, which upon completion in late 2019 will create the leading lifestyle and fashion destination in New Zealand. Brand partner interest in the development is strong across all categories and leasing is well progressed.
Statutory profit was $2.3 billion for the year including revaluation uplifts of $1.1 billion across the portfolio. This was underpinned by the completion of developments, net income growth and improvement in capitalisation rates for high quality assets.
Comparable net operating income increased 2.5% for the 12 months, driven primarily by contracted annual rent escalations. Occupancy remained strong at 99.3% at year-end reflecting retailer demand for quality space in our living centres.
Peter Allen concluded, “We are excited about the prospects for our business. We will continue to deliver on our purpose ‘creating extraordinary places, connecting and enriching communities’ ensuring we are a long-term sustainable and responsible business for all our stakeholders.”
