Westfield mall owner wants to make a push into high rise
Westfield Chermside.
Westfield shopping centres are expected to win more customers as interest rates ease, with the company also flagging the potential for apartments above its properties as it reported a $1.05bn profit.
The ASX-listed Scentre Group, which owns and manages 42 centres across Australasia, pointed to the easing monetary environment as a potential boost for its already strongly performing centres.
The landlord is looking to get the best out of its sites and is planning a series of high-rise developments which will help address the housing crisis as it will put new towers in central locations.
Scentre chief executive Elliott Rusanow says that the company’s ability to contribute to housing supply issues was based on the thesis that densification and height around existing infrastructure would be a “key part” of future housing supply.
Scentre has received rezoning approval at Westfield Hornsby in Sydney and Westfield Belconnen in Canberra and flagged more opportunities for large scale residential development.
“We have the potential to make a significant contribution to housing supply at our locations across Australia and New Zealand. We are focused on how we can create substantial long term growth for the group by adding density to our large and uniquely located strategic land holdings,” Mr Rusanow said.
He said the company’s centres were near major infrastructure, and it had the capacity to add more bulk and height to its land holdings., which span 670 hectares. He said this was a logical way of addressing housing supply issues, as centres were often already in densified areas.
Mr Rusanow pointed to record spending in centres, as more customers were drawn to Westfields, where about $29bn was spent in 2024 – well ahead of before the pandemic.
Scentre forecast 4.3 per cent growth in funds from operations in 2025 on the back of rising spending in its centres as interest rates fall. “We’re seeing increased customer visitation and increase in the sales that are being generated from the business,” the chief executive said.
Mr Rusanow called out the higher security settings in Westfield centres after the Hamas attacks on October 7, 2023, and the tragic Bondi knife attack last April. “Whilst this has seen operating costs increase during 2024, we will continue to invest in these security initiatives,” he said.
Scentre’s funds from operations rose by 3.5 per cent to $1.13bn, with analysts pointing to the opportunity for the company to buyback subordinated notes.
Citi analyst Howard Penny said that although the company’s guidance was slightly below market expectations, tipped buybacks would bridge the gap.
“Leasing momentum continues to drive revenue growth, and we expect the increased security costs to be finding a base in property expenses,” he said.
Jarden analysts said that Scentre’s guidance was below expectations, despite ongoing solid operating metrics and the benefit of refinancing the expensive hybrid debt.
“We expect investors were hoping for a slightly stronger update and could see some near-term weakness in the share price,” Jarden said. Scentre shares were down 3.2 per cent to $3.52 in mid-afternoon trade.
