The operator of Westfield shopping centres in Australia and New Zealand has posted an $862.5 million profit for 2021, representing a drastic turnaround from a $3.1 billion loss the previous year due to COVID-induced property devaluations.
The rebound has given Scentre Group's (ASX: SCG) inaugural CEO and managing director Peter Allen the opportunity to part ways on a high note, making the decision to step down in September after more than eight years in the role.
He will be replaced by current chief financial officer Elliott Rusanow who joined the company in 2019, but has been with Westfield since 1999 working in senior finance and corporate executive roles across its operations in Sydney, London and Los Angeles.
Scentre Group was spun off from the Westfield Corporation in mid-2014 following a demerger that split the Australia-New Zealand business from the European and North American business; the latter sold to French multinational Unibail-Rodamco for US$24.7 billion in mid-2018.
In today's result the group reported a 10.8 per cent increase in operating profit to $845.8 million, and property revaluation gains of $81.2 million for the year.
More than $22.1 billion worth of transactions took place within Scentre's shopping centres last year with 413 million customer visits, despite 81 government-restricted trading days with extended lockdowns in NSW, Victoria, ACT and Auckland.
"Our team delivered better results in 2021 than 2020, even with more COVID-19 restrictions. This demonstrates our proactive approach to generating long term value for our securityholders," the outgoing CEO said today.
"During the year, we completed 2,497 lease deals, including 1,090 new merchant deals. We welcomed 267 new brands to the portfolio. As a result, occupancy has increased to 98.7 per cent.
"We have been agile in our strategy to drive visitation to our Living Centres. All Westfield Living Centres remained open during the period and operated with COVID Safe protocols."
The company's success came about even though the number of restricted trading days more than doubling, and was aided by the launch of an aggregated ‘Click and Collect’ service through Westfield Connect, a membership service that grew by 600,000 members to 2.2 million people in 2021.
Scentre also provided updates on several projects, noting a $355 million (SCG share: $178 million) investment in Melbourne's Westfield Knox would open in stages between the end of 2022 and 2023, replacing the former Myer store with a range of new retailers, including Woolworths and Aldi as well as a new fresh food market.
He explained an investment in Westfield Mt Druitt in Western Sydney was progressing well with a $55 million (SCG share: $28 million) rooftop entertainment, leisure and dining precinct fully leased and on track to open next month. A project working on behalf of Cbus Property to design and construct 101 Castlereagh Street in the Sydney CBD is set for completion next year.
A $33 million investment at Westfield Penrith has commenced involving a repurposing of the former Target store to make way for a new Coles supermarket and a large-format entertainment offering, as well as upgrades and additions to the centre’s lifts and escalators.
Scentre's chair Brian Schwartz AM has recognised Allen's "outstanding contribution" with vision, dedication and hard work that has changed the way the company operates, placing it in a strong and leading position.
"His industry leadership, over many years, is to be commended and particularly through the current COVID-19 pandemic," Schwartz said.
"The Board has maintained an ongoing focus on succession to ensure we have appropriate senior management skills and capabilities in place when the time is right. This has been a substantial process over many years."
Allen said it had been a privilege to to serve as the Group’s first CEO.
"Scentre Group is in a great position, and the time is right for new leadership to accelerate our growth ambition," he said.
"I have worked closely with Elliott over many years both at Scentre Group and Westfield Group and I am confident that he will take advantage of the many opportunities ahead."
“I am honoured to be appointed as Scentre Group’s next CEO and have the privilege and opportunity to lead our dedicated team of people whose commitment to customers and communities makes Scentre Group a great organisation," Rusanow added.
Schwartz said he was confident Rusanow's leadership would continue to strengthen performance culture and grow the business.
SCG shares were down 4.27 per cent at $3.025 each at 11:28 AEDT.
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