Scentre Group Ltd (SCG.AX) Q1 2026 Earnings Call Transcript
Neutral REIT - Retail 14.09B Australia
Scentre Group (ASX Code: SCG) is the owner and operator of Westfield in Australia and New Zealand with interests in 42 Westfield Living Centres, encompassing approximately 12,000 outlets.
Scentre Group delivered 2025 earnings growth with $1.18b FFO, record Westfield activity, and 2026 guidance for ~4% NOI and 4% distribution growth.
⭐ Key Highlights
FFO growth
Funds from operations rose 4.9% to $1.18 billion in 2025, with per-security FFO at $0.2282, ahead of guidance.
High occupancy and visitation
Portfolio occupancy reached 99.8% (highest since 2013) and 2025 visitation hit 540 million, the strongest since 2019.
Largest ever partner sales and events
Business partner sales at $30 billion in 2025, up 3.6% year over year, with continued active activations from Disney, Sony Music, Live Nation, and major sports events.
Capital management and liquidity
Significant refinancing and liability management completed in 2025 ( ~$3.2 billion of rate swaps; 99% hedge coverage), with $5.2 billion of available liquidity at year-end.
Guidance for 2026
Forecasts include at least 4% NOI growth and 4% distributions growth, with FFO >$0.2373 per security and distributions at $0.1843 per security, subject to conditions.
✔Positive Signals
- FFO growth of 4.9% to $1.18 billion
- Occupancy at 99.8%, highest since 2013
- 5 million Westfield members (11% growth) and record partner sales of $30 billion
- Strong liquidity ($5.2 billion) and hedge coverage (99%)
- Guidance for 4% NOI and 4% distribution growth in 2026
✖Negative Signals
- 4% underlying NOI growth guidance includes dilution from joint ventures and ECC non-repeat assumptions
- New Zealand exchange rate and tax implications offset some earnings strength
- Disruption-related lost rent of ~$10–$15 million in 2026 from ongoing redevelopments
- Bondi redevelopment capex ($240 million) adds near-term cost and execution risk
- Partial reliance on third-party capital for land densification and monetization could impact timing
📊Financial Results
- Net operating income (NOI) for 2025: $2.1 billion, up 3.7% vs 2024; like-for-like NOI up 4.8%
- Operating and leasing capital expenditure: $167 million in 2025; guided ~$170 million for 2026
- Statutory profit: $1.78 billion, including a $456 million unrealized property revaluation; 2025 portfolio revaluations up 2.5%
- Average portfolio capitalization rate: 5.43% at December 2025
- Interest and debt: weighted average cost of debt ~5.6% in 2025, guided to ~5.4% in 2026; hedging to 82% by December 2026
🔮Future Guidance
- FFO per security guided to >$0.2373 for 2026 (with DRP ongoing)
- Distributions guided to grow ~4% in 2026 to $0.1843 per security
- Underlying NOI growth expected around 4% for 2026
- Capital management to continue (redeployment, refinancings, and potential JV activity) to fund growth
- Assumptions include limited repeat of 2025 ECC ($17.7 million) and currency/tax headwinds
💡Interesting Insights
- Strategic shift from pure redevelopment of centers to broader economic activity on surrounding land, including multiple usages beyond residential, with a capital-light approach leveraging third-party funding
Detailed Analysis
AI-generated summary of Scentre Group Ltd earnings call transcript.
Scentre Group reported 2025 funds from operations of $1.18 billion, up 4.9% year over year, with occupancy at 99.8% and 540 million visits, reflecting strong performance across Westfield destinations and a high-quality, experiential customer base. The company advanced its land-use strategy, highlighting a 670-hectare landholding near dense populations and planning progress for up to 16,100 potential dwellings across sites, while redevelopments (e.g., Bondi Level 6) and selective space repurposing expanded earnings potential. Balance sheet improvements included substantial refinancing activity, enhanced hedge coverage to 99%, and liquidity of $5.2 billion. For 2026, the group guides to at least 4% NOI growth and 4% distribution growth, supported by new developments, continued joint ventures where appropriate, and a capital-light approach to land opportunities, though some dilutive effects from prior JVs and currency/tax headwinds are acknowledged.
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