Scentre Group H1 Profit Surges 24.6% on Strategic Asset Sales and Strong Leasing

Profit Growth Outpaces Revenue Decline

Scentre Group (ASX:SCG) posted a 24.6% increase in profit after tax attributable to members for the six months ended 30 June 2026, reaching $974.5 million. This surge comes despite an 8.3% fall in revenue to $1.2 billion, reflecting the impact of strategic asset sales and portfolio reconfigurations.

Funds From Operations (FFO), a key performance metric in real estate investment, rose 4.4% to $612 million (11.73 cents per security). The group declared interim distributions of 9.215 cents per stapled security, up 4.9%, payable on 31 August 2026.

Strategic Asset Transactions and Portfolio Management

A notable highlight was the sale of a 19.9% stake in Westfield Sydney to Australian Retirement Trust (ART) in February 2026, which shifted the group’s accounting treatment of the remaining 80.1% interest to equity accounted from consolidation. This transaction reduced consolidated investment properties but unlocked capital for reinvestment.

Building on this partnership, Scentre Group announced ART’s pending acquisition of a 50% interest in Westfield Mt Gravatt for $882.5 million, subject to regulatory approval. The deal represents a 3.5% premium to book value and will see Scentre retain half ownership and continue as property, leasing, and development manager.

Leasing Strength and Customer Engagement Drive Performance

Leasing activity remains vigorous with 1,401 deals completed, pushing portfolio occupancy to 99.8%, the highest since 2013. Rent escalations averaged 5.5%, and average specialty lease spreads were +3.7%, underpinning stable income streams.

Customer visitation grew 3.5% year-to-date to 347 million, contributing to a record 552 million visits over the past 12 months. Business partner sales rose 3.7% in the half and 4.2% over the year to $30.3 billion, with specialty sales up 5.1% for the half. Westfield membership expanded 11% to 5.2 million, reflecting enhanced customer engagement initiatives.

Redevelopments and Strategic Land Pipeline

Scentre Group is advancing several redevelopment projects, including a $240 million upgrade at Westfield Bondi to create a lifestyle and entertainment precinct featuring a refurbished Event Cinemas and Kingpin venue, set to open in stages from late Q4 2026.

Additional redevelopments commenced at Westfield Penrith and Westfield Tuggerah, targeting enhanced entertainment and retail offerings. The group’s strategic landholdings exceed 670 hectares, with an increased potential pipeline of 25,600 dwellings approved or in advanced planning stages, up from 20,200. This includes master plans for new town centres and mixed-use developments at key sites such as Westfield Warringah Mall, Eastgardens, Chermside, and West Lakes.

Capital Management and Debt Refinancing Success

Capital management remains a priority, with the group redeeming US$750 million senior notes early in March 2026 and US$1.3 billion subordinated notes in May 2026, refinancing with a new $750 million six-year senior note at a margin of 1.20% over 3-month BBSW.

Senior bank facilities totaling $1.7 billion were renegotiated and extended at lower margins, reducing the group’s average debt margin from 2.6% to 1.6%. Interest rate hedging increased to 95% at an average base rate of 3.26%, up from 89% at December 2025. Available liquidity stood at $3.5 billion, sufficient to cover debt maturities until the second half of 2028.

Upgraded Guidance Signals Confidence

Reflecting its strong first-half performance, Scentre Group upgraded its full-year FFO guidance to at least 23.79 cents per security, representing growth of at least 4.25%. Distribution guidance for 2026 was also lifted to 18.473 cents per security, a 4.25% increase, split between 9.215 cents for H1 and 9.258 cents for H2.

Chief Executive Elliott Rusanow emphasised the group’s focus on long-term earnings growth through enhancing Westfield destinations and unlocking value from strategic landholdings. The group’s portfolio valuation remained robust at $33.7 billion as at 30 June 2026.