Scentre Group delivers Funds From Operations of $568 million for first six months of 2024

Scentre Group (ASX: SCG) today released its results for the six months to 30 June 2024 with Funds From Operations (FFO) of $568 million (10.95 cents per security, up 2.0%) and Distributions of $446 million (8.60 cents per security, up 4.2%).

Statutory Profit for the period was $404 million and includes an unrealised property valuation decrease of $120 million. As at 30 June 2024, the Group’s portfolio was valued at $34.3 billion.

Scentre Group Chief Executive Officer Elliott Rusanow said: “Our 42 Westfield destinations, located throughout Australia and New Zealand, represent the heart of communities they each serve. I would like to thank our team for their tireless efforts and dedication in making this possible.

“Our focus on creating more reasons for people to visit has seen 320 million customer visitations so far this year. This is an increase of 1.9% or 6 million more visits when compared to the same period last year.

“This has provided our business partners with the opportunity to increase their sales through our Westfield destinations, increasing by 2.4% to $13.4 billion in the six months to 30 June 2024 and a record $28.6 billion for the 12 months to 30 June 2024.

“Occupancy is 99.3% at 30 June 2024, an increase from 99.0% at 30 June 2023. Average specialty rent escalations increased by 5.5% during the period and new lease spreads were +1.1%. Average specialty occupancy costs are now 16.9%.

“Net Operating Income grew by 3.5% to $1,006 million for the six months to 30 June 2024. This consists of growth in property revenue of 5.1%, partially offset by increased property expenses including an increase in security costs.

“The Group collected $1,372 million of gross rent during the first half, an increase of $40 million compared to the same period in 2023 and equivalent to 100% of gross rent billings.”
The Westfield membership program now exceeds 4.1 million members, an increase of 600,000 compared to 12 months ago.

Westfield Bondi

Mr Rusanow said: “On 13 April 2024, Westfield Bondi was the location of a devastating attack that saw six innocent people lose their lives and many others impacted. We extend our deepest condolences to the families and loved ones of the victims and all those impacted by this attack. We continue to provide support, both financial and non-financial, to the victims’ families as well as the victims injured during this attack.

“We would like to thank our Westfield Bondi team, business partners, emergency first responders and the NSW Police for their assistance. We are very grateful for the support the community has shown to each other and our team during this difficult period.”

Scentre Group continues to operate its 42 Westfield destinations with increased levels of security and is working closely with police, authorities, government and industry on community safety initiatives.

Westfield destinations

The Group continues to progress its $4 billion pipeline of future retail development opportunities. During the period, the Group commenced the reconfiguration of department store space at Westfield Bondi and Westfield Burwood in Sydney and Westfield Southland in Melbourne.

Works progress on the Group’s expansion of Westfield Sydney on the corner of Market and Castlereagh Streets in Sydney’s CBD, as well as the construction of the adjoining commercial and residential tower on behalf of Cbus Property.

Mr Rusanow said: “Our portfolio includes 670 hectares of land holdings. These substantial land holdings, combined with our destinations’ strategic locations, has the potential to provide significant future long term growth opportunities for the Group.

“We are now focusing on further understanding and unlocking these and other strategic growth opportunities.”

Capital management

At 30 June 2024, the Group had available liquidity of $3.2 billion, sufficient to cover all debt maturities until the end of 2025.

During the period, the Group successfully established the $310 million Tea Tree Opportunity Trust which purchased a 50% share in Westfield Tea Tree Plaza. The Group continues to own the other 50% of the centre.

The Group has increased its interest rate hedging to 89% with an average base rate of 2.44% as at June 2024, and to 89% with an average base rate of 2.93% as at December 2024.

Today the Group is announcing a tender offer for up to US$550 million of its outstanding Non-Call 2026 Subordinated Notes. The Group intends to fund the repurchase through the issuance of new A$-denominated subordinated notes, with the size conditional on the take-up of the tender offer. Details of the amount of the tender and the new issuance will be announced in due course.

Outlook

Mr Rusanow said: “Our team’s focus on delivering on our purpose of connecting and enriching communities and attracting more people to our destinations is expected to continue to deliver growth in earnings and distributions.”

Subject to no material change in conditions, the Group reconfirms that it expects FFO to be in the range of 21.75 to 22.25 cents per security for 2024, representing 3.0% to 5.4% growth for the year.

Distributions are expected to be at least 17.20 cents per security for 2024, representing at least 3.6% growth for the year.

Authorised by the Board.