Shares of Scentre Group Ltd (ASX: SCG) have lifted almost 2% today after the property group released an update on its third quarter operations.
The company, which owns and manages Westfield-branded shopping centres in Australia and New Zealand, said it had enjoyed 5.9% sales growth during the nine months ended 30 September 2015, with particular strength in New South Wales, Victoria and New Zealand. That was marginally higher than the average comparable specialty store sales growth of 5.8% in Australia while sales grew 5.4% during the most recent quarter.
Here's a snap-shot of the company's performance:
One of the most appealing things about Scentre Group – and its international counterpart, Westfield Corp Ltd (ASX: WFD), for that matter – is that the company is focused on reallocating capital to higher quality assets. That is, those shopping centres that generate the strongest sales and attract the heaviest foot traffic.
It said that it has commenced $830 million of developments so far in 2015 ($583 million of which is Scentre Group's share), including projects to expand the food, dining and entertainment precincts. It's also introducing new domestic and international retailers it believes will resonate well with locals to make its centres even more appealing than they are today.
Scentre Group also expects those projects to show a 7.0% to 7.5% return on investment, which should yield a significant capital gain for the company.
Although the amount of shopping done online is steadily increasing, I believe that these revamps will ensure Scentre Group's stores remain relevant in the future, and are a necessary strategy for their long-term success. The company reconfirmed its forecast Funds From Operations (FFO) of 22.5 cents per security with a distribution forecast of 20.9 cents per security for the 12 months ending 31 December.
