Scentre Forecasts Another Year of Earnings, Distribution Growth

By David Winning

SYDNEY--Scentre said it expects earnings to grow again in the new fiscal year even as higher interest rates stretch household budgets and risk reducing spending in its Australian malls.

Scentre said it expects funds from operations--a smoothed measure of operating cash flow that excludes depreciation, amortization and gains on asset sales--of at least 23.73 Australian cents (16.81 U.S. cents) per security in 2026. The guidance suggests minimum growth of 4.0% on the 22.82 cents achieved in 2025.

Scentre, which owns and operates 42 Westfield branded shopping centers, also forecast an annual distribution of a 18.43 Australian cents per security this year, which would be 4.0% higher than the 17.72 cent payout in 2025.

The outlook was provided by Scentre alongside a net profit of A$1.78 billion for the 12 months through December, 2025, which was up from A$1.05 billion in the prior fiscal year.

Scentre was a big beneficiary of the Reserve Bank of Australia lowering interest rates three times during 2025, reporting improved operating metrics and capitalizing on renewed interest from direct investors in property to bring in partners on several of its biggest malls. Headline deals included the late-December sale of a 19.9% stake in its flagship Sydney center to Australian Retirement Trust for A$864 million.

However, the rate cycle has turned with the Reserve Bank of Australia raising interest rates by 25 basis points to 3.85% this month, representing its first hike since November 2023. The central bank has sounded a hawkish note about inflation, stating that it expects the consumer price index to remain above its 2-3% target band for some time.

Higher interest rates combined with the uptick in inflation could make consumers more wary about shopping in store, particularly for discretionary items such as fashion clothing that typically anchor Westfield malls. Any sign of weakening consumer sentiment could have a flow-on effect to tenants, which could become more cautious about expanding space or signing longer leasing deals.

So far, Scentre is upbeat about its prospects. It said occupancy of Scentre's properties ended the year at 99.8%, representing the highest level since 2013. It had positive new specialty leasing spreads of 3.2% in 2025.

This strong operating performance drove 4.8% growth in net operating income on a like-for-like basis, Scentre said.

"Our 2025 results represent our fifth consecutive year of earnings and distributions growth and we expect these to continue to grow in the years ahead," Chief Executive Elliott Rusanow said.

Scentre's ability to find capital partners for malls is helping to make its balance sheet stronger relative to the immediate aftermath of the Covid-19 pandemic when central banks globally were raising interest rates aggressively to tame inflation that had run hot. In addition to the Sydney mall deal, which settled this month, Scentre sold 50% of Westfield Chermside in Brisbane to two Dexus funds for A$1.3 billion during 2025.

Scentre's gearing--a measure of its debt relative to equity--stood at 30.4% at the end of December, compared to 30.9% a year earlier.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

February 23, 2026 17:17 ET (22:17 GMT)