Scentre Group

Funds from operations for the first half of 2026 were $612 million, up 4.4% year over year. Distributions were $0.09215 per security, up 4.5%. Statutory profit was $975 million, including a $478 million unrealized property revaluation increase; the portfolio’s weighted average capitalization rate was 5.45% at June 2026 and valuations increased 1.6% over the half. On operations, customer visits were 347 million in the first half, up 3.5%; over the last 12 months visits totaled 552 million, a record. Business Partner sales were $30.3 billion over 12 months, up 4.2%, and specialty sales rose 5.4% over 12 months and 5.1% in the first half. The company upgraded 2H 2026 FFO guidance to at least $0.126 per security and full-year 2026 FFO guidance to at least $0.2379 per security. It also lifted 2H distribution guidance to $0.09258 per security and full-year distribution guidance to $0.18473 per security. Management said the full-year weighted average cost of debt is expected to be around 5.4%.

Elliott Rusanow framed the strategy as simple: drive more visits, keep people longer, attract more business partners, and make better use of the group’s landholdings. He emphasized that earnings growth is coming from the current operating business, not from future stabilization assumptions, and pointed to the post-COVID improvement in visits, sales, and occupancy as evidence the strategy is working. He also stressed that the land pipeline and mixed-use/residential opportunities are additive to the core retail earnings base, not dependent on it.

Andrew Clarke said first-half FFO of $612 million was driven by strong operating results, including average specialty rent escalations of 5.5% and positive leasing spreads of 3.7%. He highlighted lower interest expense, down $58 million or 14%, helped by repayment of borrowings after JV transactions and refinancing at lower margins; management fee income rose 5.8%, while operating and leasing capital was $86 million. He also detailed the refinancing of $4.1 billion of borrowings, the issue of a $750 million 6-year senior note at a 1.2% margin, and bank facilities of $1.7 billion extended at lower margins, which reduced the weighted average credit margin to 1.6% from 2.6% and brought available liquidity to $3.5 billion. He noted the Mt Gravatt 50% divestment for $882.5 million at a 5.5% cap rate and a 3.5% premium to book value, with proceeds initially used to repay bank debt.

Analysts focused on residential development timing, capital recycling, and whether the company would take a bigger role in building out housing opportunities. Management said the pipeline of approved or advanced dwellings has risen to 25,600 and that the group is working in parallel on approvals and execution, but it is still early in defining who does what on each project. Questions also probed the capital structure and asset recycling; management said the refinancing and JV activity create capacity to keep investing, but there is no immediate plan to go down to 25% stakes or to target specific debt buybacks. On trading, management rejected the idea that second-quarter sales were weak, saying 4.7% specialty sales growth still represented robust “growth on growth.”