Westfield mall portfolio owner Scentre Group has trimmed its holdings to 39 shopping centres – 34 in Australia and 5 in New Zealand – with the sale of WestCity, the last of 9 that didn’t meet stricter new quality parameters.
Chief executive Peter Allen said when the company reported its annual results in Sydney yesterday its ownership interests totalled $A32.3 billion and it managed a portfolio totalling $A45.7 billion.
Total annual sales were steady at $A22.3 billion in 2014 & 2015, but rose to $A22.7 billion last year. Mr Allen said same-store sales for specialties rose 3.5% in 2014, 5.5% in 2015, but growth slipped to 2.6% last year. However, net property income returns continued to rise – 2.2% growth in 2014, 2.6% in 2015, 2.9% last year.
“Scentre Group’s leases are structured to provide predictable & sustainable income growth,” he said. “For 2016, 99% of the rental income from the group’s portfolio was derived from contracted base rents and the remaining 1% of rental income was directly related to retailer sales.
“In addition, the scale of the group’s portfolio provides a diversified revenue base that significantly reduces the exposure to any single shopping centre or retailer. As at 31 December 2016, the highest valued retail shopping centre represented 14% of total asset value, and the 10 highest valued retail shopping centres represented 55%. For the year ended 31 December 2016, no single anchor retailer contributed more than 3% of rental income, and no specialty store retailer contributed more than 2%.”
At 31 December, Scentre held a 51% interest in its remaining 5 New Zealand malls, and GIC of Singapore 49%.
The figures below are the book value in $NZ, retail cap rate, total annual sales/m², lettable area and number of tenants:
Albany, $288.2 million, 6.00%, $401.8 million, $13,480/m², 53,300m², 146
Manukau, $186.1 million, 7.00%, $278.1 million, $11,555/m², 45,400m², 196
Newmarket, $141.8 million, 6.63%, $148.3 million, $12.476/m², 31,600m², 112
Riccarton, $292.7 million, 6.75%, $536.5 million, $14,734/m², 55,700m², 197
St Lukes, $255.0 million, 6.50%, $347.8 million, $13,277/m², 39,900m², 180
On the overall performance for the year, Mr Allen said funds from operations rose 3.2% to $A1.238 billion (A23.2c/security). Excluding the impact of transactions, funds from operations growth would have been about 5%. Distribution was up 2% to A21.3c.
Scentre has begun $A605 million of new developments, and has work at 3 New Zealand centres – Albany, Newmarket & St Lukes – in its development pipeline.
“Our long-term strategy is to own the highest quality shopping centre portfolio in Australia & New Zealand. We have now completed the divestment of 9 shopping centres that did not meet this objective, which has refined our portfolio to meet the dynamic needs of both retailers & consumers.”
Net profit of $A2.991 billion included $A1.6 billion of revaluations: “These revaluations reflect the strong net operating income growth throughout the portfolio, the value creation from the completion of major redevelopments and the continued improvement in capitalisation rates.
“Scentre Group has a strong financial position with total assets of $A34.1 billion, gearing of 33.3% and liquidity of $A2.8 billion as at 31 December 2016.”
Related story today: Colliers to manage WestCity for new Adelaide owners
Attribution: Company release.