Westfield owner Scentre says customers surging back to malls

Scentre Group, owner of the local Westfield empire, has experienced a rise in customers coming back to malls over the last quarter.

Scentre Group CEO Peter Allen. Scentre’s best-performing centres were in New Zealand, Queensland and South Australia while NSW was soft, although Victoria traded steadily on 2019 levels. Picture: Aaron Francis

Scentre Group, owner of the local Westfield empire, has experienced a rise in customers coming back to shopping malls over the last quarter, even as coronavirus restrictions once again bite in Sydney.

Two Westfield centres, one in the CBD and the other at Bondi Junction, were among the sites visited by a positive case but the complexes are staying open.

Scentre said customer visitation has continued to improve and at the end of April, total portfolio customer visitation was back to 93 per cent of 2019 levels.

In the year to the end of April, Scentre had collected $802m of gross rental billings, including $601m during the first quarter.

The Peter Allen-led company also defied gloom about large centres to strike 588 lease deals, including 236 new merchants, bringing in 35 new brands.

Portfolio occupancy remained at a healthy 98.5 per cent at the end of March and specialty in-store sales were up 6.3 per cent compared to the March 2020 quarter, and up 1.4 per cent against the March 2019 quarter. But major retailer sales were down 0.4 per cent.

Rental collection is mainly back on track, with Scentre collecting $802m of gross rent, including $601m during the first quarter.

Investors said the landlord was collecting high levels of rent although these numbers may have been bolstered by retailers paying back rent accrued during the crisis period.

Macquarie analysts said that maintaining occupancy was a positive, although it remained cautious on the outlook for re-leasing spreads given softer sales in shopping centres.

The best performing centres were in New Zealand, Queensland and South Australia while NSW was soft, although Victoria traded steadily on 2019 levels.

Discount department stores performed strongly but discretionary spending categories were lagging. Leisure and sports stores also performed well but dining, footwear and department stores were weak.

The recovery in customer visitation was well ahead of the height of the pandemic when malls were hit with 61 per cent year-on-year declines.

Macquarie analyst Stuart McLean said Scentre had provided a solid update with foot-traffic and sales largely in line with pre-COVID levels.

“However, we expect re-leasing spreads will continue to place pressure on cashflows,” he said.

Macquarie said that it was positive that sales were recovering at a quicker pace than footfall, albeit softer footfall may impact retailers dependent on dwell time, such as food retailers.

Scentre said that subject to no material change in conditions, it reconfirms it expects to distribute at least 14c per security for 2021, with the distribution expected to continue to grow in future years.