Company Reports

In the face of rising threats from e-commerce, Scentre Group’s tenant mix is evolving. The worst affected of all is department stores, which now account for less than 16% of the group's total retail floorspace, versus 21% a decade ago. Over time, Scentre has been replacing shrinking department stores with experience-based retail that can only be consumed on-site. Scentre also focuses on creating reasons for customers to visit and stay for longer. Examples include themed events featuring Disney characters and live music. These moves ensure Westfield centers continue to draw immense foot traffic, amid structural online headwinds.

Scentre's funds from operations in the first six months of calendar 2026 grew 4% to AUD 11.7 cents per security, or cps, driven by solid rent growth and moderating interest expense. Over the past 12 months, it has seen the highest customer traffic and tenant sales turnover in the group's history.

Scentre Group's Westfield shopping centers raked in record sales in the 12 months to March 31. Tenant sales turnover in the March quarter rose 5% compared with the same period last year. New leases signed during the quarter averaged a 3% rent increase from expiring leases.

In the face of rising threat from e-commerce, Scentre Group’s tenant mix is evolving. The worst affected of all is department stores, which now account for less than 17% of the group's total retail floorspace, versus 21% a decade ago. Over time, Scentre has been replacing shrinking department stores with experience-based retail that can only be consumed on site. Scentre also focuses on creating reasons for customers to visit and stay for longer. Examples include themed events featuring Disney characters and live music. These moves ensure Westfield centers continue to draw immense foot traffic, amid structural online headwinds.

In the face of rising threat from e-commerce, Scentre Group’s tenant mix is evolving. The worst affected of all is department stores, which now account for less than 17% of the group's total retail floorspace, versus 21% a decade ago. Over time, Scentre has been replacing shrinking department stores with experience-based retail that can only be consumed on site. Scentre also focuses on creating reasons for customers to visit and stay for longer. Examples include themed events featuring Disney characters and live music. These moves ensure Westfield centers continue to draw immense foot traffic, amid structural online headwinds.

In 2025, Scentre Group expanded funds from operations by 5% to AUD 22.8 cents per security, mainly on like-for-like property income growth. Management targets 2026 FFO of at least AUD 23.7 cps (or 4% growth), with a distribution payout of 78%.

Dexus acquired a 25% stake in Westfield Chermside in Brisbane from Scentre Group for AUD 683 million, marking the launch of a new fund. This is the second transaction on Westfield Chermside between the two parties—a Dexus retail fund acquired a 25% interest in the shopping mall earlier this year.

In the face of rising threat from e-commerce, Scentre Group’s tenant mix is evolving. The worst affected of all is department stores, which now account for less than 18% of the group's total retail floorspace, versus 21% a decade ago. Over time, Scentre has been replacing shrinking department stores with experience-based retail that can only be consumed on site. Scentre also focuses on creating reasons for customers to visit and stay for longer. Examples include themed events featuring Disney characters and live music. These moves ensure Westfield centers continue to draw immense foot traffic, amid structural online headwinds.

Scentre Group delivered first-half calendar 2025 funds from operations of AUD 11.28 cents per security, and distributions of AUD 8.82 cents. Both are up 3% year-on-year. Management reaffirmed full-year FFO guidance and lifted the expected distributions slightly.

In the face of rising threat from e-commerce, Scentre Group’s tenant mix is evolving. The worst affected of all is department stores, which now account for less than 18% of the group's total retail floorspace, versus 21% a decade ago. Over time, Scentre has been replacing shrinking department stores with experience-based retail that can only be consumed on site. Scentre also focuses on creating reasons for customers to visit and stay for longer. Examples include themed events featuring Disney characters and live music. These moves ensure Westfield centers continue to draw immense foot traffic, amid structural online headwinds.

We transfer coverage of Scentre Group, the owner of 42 Westfield shopping centers in Australia and New Zealand.

The real estate sector is not immune to the potential economic impact of US tariffs. There is growing uncertainty as the likelihood of slower Australian gross domestic product growth mounts.

No-moat Scentre Group’s reported solid 2024 earnings, broadly in line with our forecasts and within company guidance. Funds from operations grew 3% to AUD 21.8 cents per security, buoyed by solid rent increases, partly offset by higher interest expenses. Distributions of AUD 17.2 cps represent a 79% payout of FFO.

Scentre Group was created in mid-2014 by combining the Australian assets of the Westfield Group with those of Westfield Retail Trust. Scentre is predominantly a passive rent collector, but also undertakes development activities, constructing new centers and redeveloping existing assets, including recent developments in New Zealand such as Westfield Newmarket in Auckland.

Scentre Group's September 2024 quarter update is in line with our expectations. Despite growth moderating, tenant sales remain solid. For the nine months to the end of September 2024, total majors and specialties sales rose 2.4% compared with the prior corresponding period. This is largely driven by categories like leisure and sports, food retail, jewelry, and supermarkets. The biggest losers are department stores, whose sales were down 2.7% on PCP, followed by homewares, down 1.7%. In the September quarter, Scentre's tenant sales growth appears to be slowing compared with the first half of the year, as cost-of-living pressures weigh on consumer spending.

In line with our expectations and on track for full-year guidance, Scentre Group delivered funds from operations of AUD 10.95 cents per security and distributions of AUD 8.60 cents per security in the first half of 2024. Our FFO forecast of AUD 21.85 cents per security is a 4% increase on last year and at the lower end of management’s reaffirmed AUD 21.75-22.25 cents guided range. We forecast distributions of AUD 17.20 cents per security, up 4% from last year.

Scentre Group was created in mid-2014 by combining the Australian assets of the Westfield Group with those of Westfield Retail Trust. Scentre is predominantly a passive rent collector, but also undertakes development activities, constructing new centers and redeveloping existing assets, including recent developments in New Zealand such as Westfield Newmarket in Auckland.

Like rival shopping mall owner no-moat Vicinity Centres, no-moat-rated Scentre is in good shape to withstand a potential retail slowdown. Portfolio occupancy remains high—at 99.2% at end-April 2024—and leases for its specialty tenants average 6.8 years in length, compared with 3.6 years at Vicinity and 5.3 years at neighborhood shopping center owner Region Group. Scentre’s specialty leases include fixed annual increases, with rent typically contracted to rise annually at 2% above the consumer price index. Australian economic statistics suggest retail conditions are slowing and could get worse as consumers’ disposable income is pressured by inflation and higher interest rates. However, Scentre achieved 3.1% increases on new leases signed in 2023, including 3.6% increases in the second half, while sales for Scentre’s tenants were 2.4% higher in the first quarter of fiscal 2024 compared with the same period last year. We think this bodes reasonably well for future leasing outcomes and rent growth.

Scentre Group was created in mid-2014 by combining the Australian assets of the Westfield Group with those of Westfield Retail Trust. Scentre is predominantly a passive rent collector, but also undertakes development activities, constructing new centers and redeveloping existing assets, including recent developments in New Zealand such as Westfield Newmarket in Auckland.

Scentre Group was created in mid-2014 by combining the Australian assets of the Westfield Group with those of Westfield Retail Trust. Scentre is predominantly a passive rent collector, but also undertakes development activities, constructing new centers and redeveloping existing assets, including recent developments in New Zealand such as Westfield Newmarket in Auckland.