SCA finds good buys in the suburban malls

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This was published 8 years ago

SCA finds good buys in the suburban malls

By Carolyn Cummins
Updated

The increased competition in the supermarket sector from new entrants has led to a softening in sales contribution to Shopping Centres Australasia, as the landlord.

But the slowdown in the rate of growth has been offset by new redevelopments in the group's portfolio and more than $233 million of new acquisitions over the past year.

Woolworths has also separated its Big W department store chain from online retailer Ezibuy.

Woolworths has also separated its Big W department store chain from online retailer Ezibuy.

Demand for shopping centres in the suburbs that offer swift, in and out, services has seen SCA on a path of acquisitions and mall upgrades.

Neighbourhood shopping centres have been the most highly sought after by investors with close to $3 billion changing hands, nationally, in the past year.

The Woolworths property offspring, SCA, is the now the largest owner of neighbourhood centres in Australia.

Its major tenants are Woolworths and Coles supermarkets, a Masters store and it has added Aldi to the mix.

SCA chief executive Anthony Mellowes, said the group would be selective in new purchases, some of which could be onsold to the new, unlisted fund, SURF 1, with the potential of creating a second fund in the future.

Despite the softer sales contributions from the anchor tenants, rents on average for new tenants rose 7.3 per cent, which is a stronger leasing spread than many of the larger malls. These new tenants include banks, medical centres and leisure, such as nail bars, which offset the declines in the supermarkets.

"While Australian supermarket sales growth has slowed, these growth rates are still higher than our listed market peers and above Woolworths comparable store sales growth averages," Mr Mellowes said.

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"The higher growth rates in our centres are due to the relative youth of our portfolio, larger than average supermarket store sizes, and many of the properties being located in growth corridors."

For the year, the group reported a statutory net profit after tax of $150.5 million, up by 34.9 per cent on the same period last year. The funds from operations, which is a more accurate measure for real estate investment trusts was $80.1 million, up by 14.8 per cent on the same period last year, which was in line with market expectations.

The final distribution was 5.8¢, taking the annual payment to 11.4¢ up 3.6 per cent on the same period last year, which will paid on August 28.

Mr Mellowes issued a distributable earnings guidance of 13.3¢ and 2016 financial year cash distributions guidance of 12¢ per security.

"We have always said we have locked in the neighbourhood shopping centres, which is traditionally the supermarket anchor with 10 to 15 shops and that really is what our strategy is all about," Mr Mellowes said.

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