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Westfield Sales Fall contribute to decline for SCentre

May 1, 2019

 

SCentre issued its quarterly update for the 41 strong portfolio of Westfield Centres. The recent weakness in retail spending has been felt by Westfield with sales for the last quarter lower than previous reports, and with annual sales growth now declining. Despite this, the Group reconfirmed its forecast FFO growth of approximately 3% per annum.

 

As the retail market has changed, the market has moved against SCentre with the share price falling -6.45% over the past 12 months whilst the AREIT 200 Index is +11.2% higher over the same period. (See chart below)

 

The group have reported high occupancy's and a large number of leasing deals, but have not, unlike in their annual report, provided any commentary on their latest leasing spreads, previously reporting a -3.5% decline in new rents.

 

On a sales per square metre basis:

  • Total stable portfolio sales were up 1.1% for the quarter and 1.3% for the year

  • Total specialty sales were up 0.7% for the quarter and 1.3% for the year (were up 1.5% in Dec)

  • > 400 sqm sales were up 1.0% for the quarter and 1.9% for the year (were up 2.1% in Dec)

  • < 400 sqm sales were up 0.8% for the quarter and 1.3% for the year (were up 1.5% in Dec)

  • Majors sales were up 2.3% for the quarter and 1.8% for the year (were up 1.4% in Dec)

The impacts from lower sales are being felt across the country with the exception of NSW where sales in the last quarter growth was higher than the annual rate.

 

Westfield are positioning their portfolio in the minds of investors as part of the urban infrastructure, referring to their malls as Living Centres - focused on community, connection & evolution. The business will therefore continue to rely on expansion, refurbishment and development activity to grow its business and is currently working through a development pipeline of $3.7bn. Westfield Newmarket (NZ) development is the next project to complete with staged openings commencing early Q3 2019. 

 

Outlook

The Group reconfirms forecast FFO growth for the 12 months ending 31 December 2019 of approximately 3%. The distribution for 2019 is forecast to be 22.60 cents per security, an increase of 2%.

 

SCG Trading Chart vs ASX200 AREIT
Blue - SCG ,  

Purple ASX200 AREIT

12 months

 

 

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