Company Reports

Scentre Group was created in mid-2014 by combining the Australian assets of the Westfield Group with those of Westfield Retail Trust. Scentre is predominantly a passive rent collector, but also undertakes development activities, constructing new centers and redeveloping existing assets, including recent developments in New Zealand such as Westfield Newmarket in Auckland.

Scentre Group delivered a strong 2023 annual result, with its centers trading robustly. Funds from operations rose 5.2% to AUD 21 cents per security, and distributions grew 5.4% to AUD 16.6 cents, exceeding guidance and our estimate of AUD 16.5 cents. Near-term risks include a possible recession, retail slowdown, or the risk of interest rates staying high. However, this is balanced by strong population growth, which is slowing but remains at high levels, incoming tax cuts for Australians, and Scentre’s leases to a strong list of tenants. We assume 2024 FFO of AUD 0.22, implying 3.8% growth, just below the midpoint of management’s guidance range of AUD 21.75-AUD 22.25 cents. We assume distributions of AUD 17.2 cents, with management targeting DPS of at least that level.

The federal government’s migration review was released on Dec. 11 and it suggests high population growth remains the status quo. The review tinkers with various visa rules, but contains no major reduction in migrant numbers, suggesting high migration will persist, relative to precoronavirus levels and versus other developed countries.

Scentre Group’s first-half 2023 result was in line with our full-year expectations and management guidance. Funds from operations of AUD 10.74 cents per security looks on track for our full-year estimate of AUD 20.99 cps, and distributions of AUD 8.25 cps are halfway to our full-year estimate of AUD 16.5 cps. More importantly for the medium term, we think downside risk should Australia enter a recession has been reduced by new leases signed in the half. On the time value of money our fair value estimate rises 3% to AUD 3.40, and Scentre Group securities screen as almost 20% undervalued.

Scentre Group was created in mid-2014 by combining the Australian assets of the Westfield Group with those of Westfield Retail Trust. Scentre is predominantly a passive rent collector, but also undertakes development activities, constructing new centres and redeveloping existing assets, including recent new developments in New Zealand such as Westfield Newmarket in Auckland.

Scentre Group was created in mid-2014 by combining the Australian assets of the Westfield Group with those of Westfield Retail Trust. It is predominantly a passive rent collector, but also undertakes development activities, constructing new centres and redeveloping existing assets.

Scentre Group was created in mid-2014 by combining the Australian assets of the Westfield Group with those of Westfield Retail Trust. It is predominantly a passive rent collector, though it does also undertake development activities, constructing new centres and redeveloping existing assets.

Scentre Group was created in mid-2014 by combining the Australian assets of the Westfield Group with those of Westfield Retail Trust. It is predominantly a passive rent collector, though it does also undertake development activities, constructing new centres and redeveloping existing assets.

We increase our fair value estimate for no-moat Scentre Group by 4% to AUD 2.50, up from AUD 2.40. We also reduce our uncertainty rating to high, from very high, as the probability of our coronavirus worst-case scenario recedes. Both changes are driven by strong contact tracing procedures in Australia and increased likelihood of successful vaccine rollout.

Scentre Group was created in mid-2014 by combining the Australian assets of the Westfield Group with those of Westfield Retail Trust. It is predominantly a passive rent collector, though it does also undertake development activities, constructing new centres and redeveloping existing assets.

Scentre Group was created in mid-2014 by combining the Australian assets of the Westfield Group with those of Westfield Retail Trust. It is predominantly a passive rent collector, though it does also undertake development activities, constructing new centres and redeveloping existing assets.

We are placing both Vicinity Centres and Scentre Group under review as we reassess the moats of the high-end Australian mall operators. We removed the moats for Stockland and GPT Group earlier in 2020, in part due to the challenges in their retail portfolios. Vicinity and Scentre have substantially higher quality retail portfolios. That said, the challenging conditions in the face of COVID-19 and acceleration of market share growth of e-commerce warrants a review of the moats.

We reduce our fair value estimate for narrow-moat Scentre Group by 23% to AUD 2.95 from AUD 3.85, as we foresee aversion to public places and discretionary spending until the virus crisis (health and financial) is under control. Moreover, online habits formed during shutdowns will likely cement loss of market share to e-commerce.

Scentre Group was created by combining the Australian assets of Westfield Group with those of Westfield Retail Trust in mid-2014.

Narrow-moat-rated Scentre Group delivered a respectable 2019 calendar year result, amid a challenging retail environment. Funds from operations, or FFO, per security was AUD 25.42 cents, up 0.7%. This was in line with the company’s guidance, and our expectations, after adjustments including a share buyback.

Scentre Group was created by combining the Australian assets of Westfield Group with those of Westfield Retail Trust in mid-2014.

We’ve maintained the same fair value estimate of AUD 3.85 per share on narrow-moat-rated Scentre Group since August 2017, which is in line with the share price immediately after the group’s third-quarter operating update. We make no change to our forecasts based on today’s announcement, and our fair value estimate again remains unchanged.

Narrow-moat-rated Scentre Group’s half-year result was in line with our expectations. We make no change to our fair value estimate of AUD 3.85, and the security screens as fairly priced. The result shows Scentre has weathered the threat of online competition and an indebted consumer. However, the race is a marathon not a sprint, and there are signs Scentre Group is tiring.

Scentre Group was created by combining the Australian assets of Westfield Group with those of Westfield Retail Trust in mid-2014.

We make no changes to our AUD 3.85 fair value estimate for Scentre Group following the company's disposal of office towers in the Sydney central business district. The AUD 1.52 billion transaction, by way of a 299-year lease, further skews the firm's property portfolio towards its retail malls. For this reason, the transaction makes sense. We believe Scentre's large-format malls enjoy sustainable competitive advantages from efficient scale, underpinning the firm's narrow economic moat. Last trading at AUD 3.97 per security, Scentre screens as fairly valued.