Scentre Group

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The Lowy family has sold its $815 million stake in Australian shopping centre owner Scentre Group ending its association with the Australian retail sector that began in 1959.
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The move cuts the family’s ties with the 60 year old shopping centre company that grew from a single centre that opened in Blacktown in western Sydney.
Sir Frank Lowy has been in Sydney overseeing the sell down through investment bank UBS.
The Australian newspaper reported its sent a chill through the listed real estate investment trust sector.
The stake comprised 3.9 per cent of the company’s stock, with 206.1 million shares divested to institutions in what marked the largest ever REIT block trade in Australian history.
The sale at $3.956 was at a small discount to the closing price of $4.01.
Sir Frank, who was born in 1930, was knighted in 2017 and ranked as Australia’s 6th richest person on this year’s The List with a fortune of $8.92bn.
He co-founded the Westfield empire with John Saunders.
The offshore component sold to French group Unibail-Rodamco in a $32bn deal finalised last year.
Scentre was created in June 2014 when the Westfield Group separated its American and European businesses.
The sale also positions the Lowy Family Group for the next phase of investing and it is already backing a new property fund in Australia looking for opportunistic plays, with the aid of former Westfield executive Michael Gutman and the Alceon operation.
The group has launched a series of ventures in fields ranging from health, cybersecurity and theatre, confirming Sir Frank’s entrepreneurial streak.
The Lowy exit marks the end of an era and signals new challenges for the retail sector.
Department stores Myer and David Jones are ailing but the departing Mr Miles pointed to the surge in luxury retailers and predicted more would come into Australia.
He warned that not all shopping centres would come through the industry’s challenges but the local Westfield empire had been dramatically reshaped by asset sales in recent years and efforts to integrate with e-commerce.
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j.ballantyne1990-6AQqhLzZaK

Chill for REITs as Lowy family sell $815 million Scentre Group stake

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Scentre Group announced its results for the 12 months to 31 December 2017, delivering a profit of $4.2 billion, including property revaluations of $3.2 billion.
The Group’s CEO, Peter Allen, said the company are very pleased that their strategy to create extraordinary places people want to visit has enabled the Group to continue to deliver strong results.
"This focus on evolving our living centres is accelerating consumer appetite for world-class shopping and social destinations and driving strong demand for our high-quality space within each of our 39 unique markets. "Our investment in creating exceptional experiences at every touch point continues to drive income growth and long-term sustainable returns.  We remain focused on achieving a diverse and engaging product mix, connecting customers and retailers across our portfolio.”
Scentre Group commenced over <a href="https://www.urban.com.au/expert-insights/investing/74993-scentre-group-lines-up-900-million-westfield-centres-in-gold-coast-perth-and-melbourne" target="_blank">$1.1 billion of developments</a> including projects at Westfield Carousel in Perth, Westfield Plenty Valley in Melbourne, Westfield Kotara in Newcastle and Westfield Coomera on Queensland’s Gold Coast.
The Group recently announced the NZ$790 million redevelopment of Westfield Newmarket, which will create a world class retail and lifestyle destination unparalleled in the New Zealand market.
The redevelopment will feature the first David Jones in Auckland, a new Farmers department store and Countdown supermarket, which will both bring their newest format stores to the project. A new Event Cinemas complex will offer both V-Max and Gold Class, and a rooftop lifestyle, dining and entertainment precinct will encompass some of the country’s finest food and beverage operators in an outdoor space that will complement and enhance the local scene.
The completed project will become the flagship for the Group’s New Zealand portfolio, as well as one of the country’s best retail centres, with more than 230 new specialty stores that will include premium fashion, food, technology, lifestyle and entertainment. The centre will have a gross lettable area of 88,150 square metres and is due for completion in the fourth quarter of 2019.
During the year Scentre Group proactively curated the retail product mix across the portfolio, leasing 1,258 stores including 289 retail brands that are new to the portfolio and partnering with an additional 592 existing retailers to grow their businesses through the opening of an additional 943 stores. 
Scentre Group completed lease deals across all categories including 31 major stores with average tenure of 15 years, and 2,466 specialty lease deals covering an aggregate of more than 345,000 square metres of space.
Comparable net operating income increased 2.75% for the 12 months, driven primarily by contracted annual rent escalations.
Since the establishment of Scentre Group, the Group has grown the value of its portfolio by more than 30% to $36.2 billion. Scentre Group has a strong financial position with total assets of $37.5 billion, gearing of 32.1% and liquidity of $2.7 billion as at 31 December 2017. 
 
 
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jrobinson-rf4aSBido9

Scentre Group posts $4.2 billion profit over 2017

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Shopping mall owner Scentre Group said it was working on a development pipeline of $900 million on projects in Perth, Melbourne and the Gold Coast, which includes the greenfield development at Westfield Coomera (above).
The others are Westfield Carousel in Perth and Westfield Plenty Valley in Melbourne.
The Westfield Shopping Centre owner expects returns in excess of 15%, it said during the half-yearly results announcement.
“Our announcement of the $470 million (SCG share: $235 million) development at Westfield Coomera (above), our first greenfield development in more than 12 years, reflects our commitment to growing the business, improving the quality of our portfolio and meeting customer and retailer needs,” said chief executive Peter Allen in an earnings release.
The new 59,000 square metre regional centre will comprise Coles and Woolworths supermarkets, an Event Cinemas complex including Gold Class, Kmart and Target discount department stores, and 140 specialty stores including an alfresco leisure and dining precinct.
The group also completed the $355 million development at Westfield Chermside, which includes a new fashion galleria over two levels establishing Chermside.
Adjacent to the galleria is the new entertainment, dining and leisure precinct, with 25 new restaurants and cafes and a laneway with a village atmosphere. 
The redevelopment is expected to add more than $300 million in retail sales and is forecast to exceed expected returns, creating significant long-term value for shareholders. 
Among current developments, Westfield Whitford City is on track to open in September.
Scentre reported funds from operations (FFO) grew to $638 million for the six months to June 30 and said it was on track for a full-year growth of nearly 4.25%.
The FFO figure represents 12.01 cents per security, up 3.5% and distribution of 10.86 cents per security, up 2%. 
Excluding the impact of transactions, FFO growth would have been nearly 5%, Scentre said.
Net operating income increased 2.6% for the six months, driven by contractual rent increases. The group, which owns Westfield Shopping Centres, maintained its forecast range of 2.75% - 3.0% growth for the full year.
Interestingly, fast-food franchisee SumoSalad was locked in a <a href="https://www.urban.com.au/expert-insights/investing/73263-sumosalad-close-to-winning-rental-dispute-with-landlord-westfield" target="_blank">rental dispute with landlord Westfield</a> recently, and was close to negotiating lower rents through its tactic of insolvency laws.
The Scentre Centre group owns and operates 39 Westfield shopping centres, including 16 of the top 25 performing centres in Australia with assets under management of $47.4 billion, it said.
For the six months, profit was $1.4 billion, which included $929 million of revaluation gains driven by growth in operating income across the portfolio and the completion of the Westfield Chermside redevelopment.
Comparable specialty sales in the portfolio grew 2% for the twelve months and 1.5% for the six months to 30 June 2017, with average specialty sales increasing to $11,250 per square metre. Strong sales growth was seen in the food retail, food dining, technology &amp; appliances and retail services categories.
“The portfolio’s high specialty sales productivity ensures strong demand from retailers wanting to generate growth in sales and customer engagement,” Allen said.
The portfolio remains more than 99.5% leased.
The group announced that it will extend its current practice to grow distributions at a lower rate than earnings growth until it reaches a payout ratio at 85% of FFO. The distribution is targeted to grow at 2% per annum until the target payout ratio of 85% is achieved. Once this target is achieved the distribution is expected to grow in line with FFO growth. 
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jonathanchancellor-7SQnKwU6yx

Scentre Group lines up $900 million Westfield centres in Gold Coast, Perth and Melbourne 

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Scentre Group, owner and operator of Westfield Australia and New Zealand, has reported comparable specialty sales in the Australian portfolio grew 5.3% over the past 12 months, with average annual specialty sales of $10,826 per square metre (psm).
It noted strong sales performance was seen across most categories, with good increases in the fashion, footwear, jewellery, leisure, health and beauty, technology and cinemas categories.
Average annual specialty retail sales in New Zealand increased to NZ$12,117 psm, representing comparable specialty sales growth of 6.6% for the year.
In Australia, average specialty retail sales had been at $10,666 per square metre and comparable specialty store sales growth was 5.8% for the nine months to September.
In New Zealand, average specialty retail sales increased to NZ$10,534 per square metre, and comparable specialty store sales growth was 6.5% for the initial nine months.
 
Comparable property net operating income increased 2.6% for the 12 months, higher than the forecast range of 2.0 - 2.5%, reflecting lower vacancies and additional income streams. 
Scentre was spun out of the Westfield empire in 2014, and now runs the local malls. Westfield Corp runs the overseas malls.
It reported a 58.9 per cent drop in after tax profit to $2.71 billion for the full year, despite a 32.5 per cent jump in revenue to $2.87 billion. 
Funds from operations for the period was $1.199 billion. 
The group will pay a final dividend of 10.45c a security on February 29, taking the total dividend for the year to 20.9c. 
The results were for the 12 months to 31 December 2015. 
The Chairman of Scentre Group, Mr Frank Lowy said the rationale for the creation of Scentre Group has been validated with the strong results released today.
“Scentre Group’s pre-eminent portfolio and unique market position have provided a strong operating performance and excellent returns for security-holders since the Group was established as a separate entity.”
Scentre Group’s shopping centre assets saw significant revaluations of $1.5 billion during the year.
The value increase was driven by growth in underlying income, the completion of developments and a firming of capitalisation rates across the portfolio. The portfolio weighted average capitalisation rate reduced by 38 bp during 2015 to 5.57% reflecting the quality of the centres.
At 31 December 2015, Scentre Group had a balance sheet with total assets of $31.8 billion, a gearing ratio of 33.3% and liquidity of $3.7 billion.  
In 2015, the Group commenced $830 million (SCG share: $583 million) of redevelopments, including projects at Casey Central, Chatswood, Hurstville, Kotara, North Lakes and Warringah Mall.
“We have already opened the redevelopments at Chatswood, Hurstville, North Lakes and Kotara which are trading strongly. These developments will be accretive to earnings and create substantial long-term value,” chief executive officer of Scentre Group, Peter Allen, said
These recently opened developments featured new experiential precincts and offerings for shoppers and retailers with:
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<li>a “Hawker Lane” Asian dining market at Westfield Chatswood alongside a new five-level mall on Victoria Avenue including a flagship two level Topshop Topman, H&amp;M, Uniqlo, a relocated Rebel Sport and 40 new retailers.</li>
<li>an extensive ambience upgrade and a new rooftop dining and entertainment precinct at Westfield Hurstville, with a range of late-trading casual dining outlets, linking directly to the refurbished Event Cinemas. New retailers to the centre include a Woolworths supermarket, BIG W discount department store, JB Hi-Fi HOME, Cotton On Mega Store and Rebel Sport.</li>
<li>“The Marketplace” fresh food and “The Laneway” al fresco dining precincts at Westfield North Lakes. </li>
<li>A Hunter Valley-inspired outdoor dining and entertainment precinct, “The Rooftop”, featuring nine new restaurants, a performance stage, play area, and a new Event Cinemas complex at Westfield Kotara.</li>
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In 2016, the Group has commenced the $355 million redevelopment at Westfield Chermside, which will include the introduction of five international mini-major retailers, a broadening of the range and depth of the centre’s fashion offer as well as the largest lifestyle and entertainment precinct in an Australian centre. The centre will add 26,000 sqm of retail space bringing the total size to 156,643 sqm on completion.
At Westfield North Lakes the Group has also commenced the $140 million Stage 2 IKEA Link Mall project which connects a new IKEA-owned store with the existing centre. The development will include a new Kmart discount department store, JB Hi-Fi HOME, Rebel and approximately 50 new specialty stores over a single level with completion expected in December 2016.
Pre-development work continues across the portfolio and the Group maintains a forward development pipeline in excess of $3 billion.
During the year Scentre Group completed the sales of Figtree, Strathpine, Warrawong and North Rocks in Australia for gross proceeds of $783 million and also announced the sales of Glenfield, Queensgate and Chartwell in New Zealand for a total of NZ$549 million, the latter two being expected to settle in the first half of 2016. 
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jchancellor-FAypfDUnLy

Increased speciality store sales, but stronger in NZ than Australia: Scentre 

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Frank Lowy has announced he will retire as chairman of the ASX-listed Scentre Group at the company's annual general meeting in May 2016.
The Scentre board has appointed deputy chairman Brian Schwartz to succeed Lowy.
Lowy said it was the right time to announce his retirement from Scentre Group given that it had successfully completed its establishment phase following the restructuring of the Westfield Group in June 2014. 
"The transition to new leadership has been carefully planned and I have the utmost confidence that Brian Schwartz as the incoming chairman, and CEO Peter Allen, will make the most of those opportunities," he said.
“Frank has been one of the outstanding business and community leaders of the past 50 years,” Schwartz said.
Lowy said the Lowy Family Group would continue with its investment in Scentre Group.
He will continue in his role as chairman of Westfield Corporation.
Steven Lowy will continue to be a non-executive director of the Scentre Group.
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Frank Lowy to retire as chairman of Scentre Group

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Scentre Group announced the sale of four local shopping centres amounting to $783 million due to settle in the third quarter of 2015.
Releasing their results for the six months to June 30 2015, funds from operations came to 11.38 cents per security and distribution of 10.45 cents per security, keeping in line with forecasts.
Scentre Group expects to meet its 2015 full year FFO forecast of 22.5 cents per security making for 3.5% growth and a distribution forecast of 20.9 cents per security. 
Scentre Group chief executive officer Peter Allen said the group is pleased with these operational results, which reflect the focus of driving value from our high quality shopping centre portfolio. 
"In addition to having 14 of the top 20 shopping centres in Australia by annual sales, each of Bondi Junction and Westfield Sydney now generate annual sales in excess of $1.0 billion," he said.
“The Group is committed to creating extraordinary places connecting and enriching communities, and this year has announced a number of major initiatives, including $825 million of development starts, new services to improve the shopper and retailer experience, and an improvement in the quality of the Australian portfolio.
Gross proceeds of recent sales account $783 million, a 3.4% premium to 30 June 2015 book values.
The Group maintains its forecast FFO of 22.5 cents per security, representing 3.5% growth with a distribution forecast of 20.9 cents per security for the twelve months ending 
 
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