Scentre Group (SCG) SNAPSHOT
Profile: Scentre Group (SCG) is a real estate investment trust (REIT). It develops, designs, constructs, leases and manages 41 Westfield shopping centres across Australia and New Zealand. Many of SCG’s centres are owned in partnership with third-party investment institutions. In 2018, in excess of 535 million customer visits were made to its centres in Australia and New Zealand. SCG is a top 20 ASX listed company as measured by market capitalisation.
History: In 1959, John Saunders and Frank Lowy established their first shopping centre, Westfield Plaza in Blacktown, NSW. In 1960, Westfield was listed on the ASX and began developing centres across Australia before eventually expanding to the US, NZ and Europe. SCG was founded in June 2014 through the merger of Westfield Retail Trust and Westfield Group’s Australian and NZ management business. Westfield Corporation (a separate entity) was formed to own, manage and develop Westfield Group’s international shopping centre portfolio.
Earnings composition: The Property Investment segment generated $1,901m, or 94%, of SCG FY18 income. The Property Management and Construction segment reported $131m, or 6%, of group income. SCG generated 92% of its FY18 revenue in Australia and 8% in New Zealand.
Most recent result – 1H19: Funds from operations (FFO), a measure of REIT performance which removes the impacts of property revaluations, depreciation and amortisation (discussed further on page two), was up 3% on the prior corresponding period (pcp) to $676m. FFO per security was 12.75 cents. Statutory net profit was $740m, down 49% on the pcp, primarily due to lower property revaluation gains. Annual retail sales in SCG’s shopping centres increased by $1.2bn to $24.4bn. During the period, SCG divested its Sydney CBD Office Towers for $1.5bn and a 50% interest Westfield Burwood for $575m. SCG declared a dividend of 11.3 cents, up from 11.1 cents in the pcp.
Company outlook: SCG forecasts FFO growth for the 12 months ending 31 December 2019 of approximately 0.7%. The total distribution for 2019 is forecast to be 22.60 cents per security, up 2% from 22.16 cents.
Important dates: Ex-dividend date was 14 August 2019. Payment date is 30 August 2019. AGM is scheduled for 4 April 2019.
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