Scentre Group (ASX: SCG) shares fell 4.40% on Friday to a 52-week low of $3.26 per share. The Aussie retail REIT's shares have been under pressure in 2020 and are down 14.88% since the start of the year.
Why is the Scentre Group share price crashing lower in 2020
Scentre Group shares have fallen as the Aussie retail real estate investment trust (REIT) struggles to boost profits. Scentre Group is a shopping centre owner and operator under the Westfield brand and one of the largest ASX REITs.
The group posted its full-year result in February, highlighted by $1.35 billion in funds from operations (FFO). That figure was in line with forecasts as FFO per security climbed 0.7% higher on the previous year. Scentre reported that its property portfolio (made up of 42 Westfield shopping/'living' centres) has an occupancy rate of 99.3%. However, Scentre Group shares fell as the company's net assets shrunk to $23.34 billion, down from $23.64 billion in 2018.
The outlook for 2020 isn't much better with forecast FFO per share of 25.3 cents per security. Visitor numbers were strong in 2019 and the recent Reserve Bank of Australia (RBA) interest rate cut might help.
Lower interest rates could mean lower rents for Scentre Group and put its share price under pressure. However, it could also provide some respite for the retail tenants in its Westfield shopping centres. The other benefit is that any government stimulus to combat the coronavirus outbreak could put more money in consumers' pockets.
That money could then filter through the economy in the form of higher retail consumption. Scentre Group shares could climb higher if we do start to see a pickup in the retail sector.
Which other ASX shares are under pressure?
It's not just Scentre Group shares that are feeling the heat right now. Vicinity Centres (ASX: VCX) and REA Group Limited (ASX: REA) shares are both in the negative at the moment.
While it's been a tough start to the year for the ASX REITs, Scentre is now yielding a tidy 5.89% and could be a handy portfolio addition.
