Shopping centre landlord SCA Property Group has turned in a $432.4m first-half net profit, up about 320 per cent from $102.9m the previous corresponding half, on the back of strong revaluations as its network of Woolworths and Coles centres came through the pandemic.
Supermarkets have traded through Omicron despite supply-chain issues and schemes to assist small tenants have been factored into how landlords are operating.
But the results showed their performance was flattening out as routines normalised and people started venturing beyond their local stores.
SCA’s adjusted funds from operations, a measure of earnings, hit $80.9m in a 29.6 per cent rise, as the property portfolio rose in value to $4.43bn from $4 billion last June.
Supermarket moving annual turnover growth dipped by 0.1 per cent, against a jump of 3.2 per cent last June, and speciality store growth was 5.5 per cent against 9.7 per cent last June
SCA chief executive Anthony Mellowes said that over the six months the group’s convenience-based centres remained resilient.
“Speciality tenant sales grew, while supermarket sales were flat compared to the elevated levels in the prior year. Leasing spreads and cash collection rates were impacted by lockdowns in New South Wales and Victoria but improved toward the end of the half-year period,” he said.
SCA grew its portfolio in the period, contracting to acquire seven convenience-based centres in the hot property market. The company also set up a joint venture with Singaporean sovereign fund GIC that will grow to $750m of assets.
Mr Mellowes said the new fund positioned the group to access relatively lower return metropolitan neighbourhoods, while growing asset-light management fee income.
SCA chief financial officer Mark Fleming said the company‘s earnings per unit forecast for fiscal 2022 was now above pre-Covid levels. “This has been the result of solid operational performance in a challenging environment and a strong balance sheet enabling investment in acquisitions, developments and funds management,”
The group flagged it will hold more than $450m in cash and undrawn facilities, giving it the firepower to expand.
Jefferies analysts said the result was underpinned by strong cash collections, reduced Covid-19 impacts, lower speciality vacancy and $348m of acquisitions. They noted supermarket and discount department store sales were softer.
SCA Property units bumped up 9c to close at $2.89.
Extracted from The Australian