Pressure builds on Westfield shopping mall owner Scentre Group to raise capital

Macquarie is estimating that the value of Scentre’s portfolio could have fallen by up to 15 per cent.

The pressure on Westfield shopping mall owner Scentre Group to raise capital to combat rising vacancy rates and falling rents is growing, with analysts from Macquarie Bank calling attention to the company’s increasing debt.

Scentre Group, which owns 42 Westfield Australian centres, reported in its full year results that its net debt is $12.9bn.

With a market capitalisation of $9.97bn and a pro-forma debt gearing of 36.5 per cent, the company is moving closer towards being downgraded by Moody’s to a AA rating, which would occur if gearing reaches 45 per cent, analysts say.

In an analyst note, Macquarie said that potential solutions include asset sales or equity issuance.

However, with Macquarie estimating that the value of Scentre’s portfolio could have fallen by up to 15 per cent, from a net asset position of $23bn and the end of last year to $19.58bn today, an equity raise would be the most likely way to reduce debt.

The company paused a $800m share buyback program in March when the pandemic hit after clawing back $479m of stock.