Westfield says $12b in retail sales not ‘revenge spend’

Australia’s largest retail landlord is adding basketball courts, community centres, libraries and swim schools to its tenant mix as it dives deeper into an experience-based shopping trend that drove $12 billion in half-year sales across its malls.

Scentre Group, which owns and manages dozens of Westfield branded shopping centres, has upgraded its full-year guidance per security to 19 cents after experiencing a strong rebound in revenue, occupancy and rent collection.

Scentre’s incoming chief executive, Elliot Rusanow, estimates the group’s malls, like those in Sydney’s Chatswood and Melbourne’s Doncaster, are in proximity to 21 million people in Australia and New Zealand, about 10 million of whom visit once a week.

“We’ve grown customer visitation, portfolio occupancy, rental income and cash collection resulting in strong profit growth for the half,” said chief executive Peter Allen, who will step down from running the group in October.

Operating profit for the six months to June was up 17.5 per cent to $540.5 million, compared with the previous corresponding half-year, and about $12 billion in sales flowed through retailers at its 42 Westfield malls, half a billion more than it reported for the same period in 2019 before the pandemic.

Jarden analyst Lou Pirenc labelled the landlord’s first half result as “well ahead of expectations”, noting that the group is still trading at a 25 per cent discount.

“I don’t think it’s revenge spending because, if it was, it would have been all out there and then slowed down.”

Scentre’s outgoing chief executive Peter Allen

“We believe more evidence of a recovery in rents and superior funds from operations growth to most REITs, should drive a re-rating,” Pirenc said.

Occupancy was up to 98.8 per cent, average rents increased by $5 per square metre, gross rent collection was $1.25 billion, and 585 new merchants were signed up across its centres, with 108 of those new to the portfolio, during the half year.