Key Highlights

  • Funds from operations were $612.4 million, up 4.4%, and FFO per security was 11.73 cents, up 4.0%.
  • Occupancy was 99.8%, which the company says is the highest since 2013, and Business partner sales were $30.3 billion, up 4.2%.
  • FY26 guidance is FFO of at least 23.79 cents per security and distributions of 18.473 cents per security.
  • Gearing was 35.5% and Debt to EBITDA was 5.9 times.

How is Scentre Group (ASX:SCG) supporting Earnings growth across its Westfield shopping centres? According to its 25 August 2026 half-year results, through near-full occupancy, rising specialty sales, rent escalations and lower funding margins, while it recycles Capital and plans redevelopment and residential projects. Figures are in Australian dollars for the six months to 30 June 2026 (1H26) unless stated.

The half-year in numbers

Scentre reported funds from operations (FFO), its core earnings measure for property, of $612.4 million, up 4.4 per cent on the first half of 2025. FFO per security was 11.73 cents, up 4.0 per cent, and operating profit was $611.7 million, up 4.5 per cent. Distributions were $481.3 million, or 9.215 cents per security, up 4.9 per cent.

Statutory profit was $974.5 million, including a $477.6 million unrealised property Revaluation gain, so FFO is the better guide to underlying performance. Property Revenue was $1,334.6 million; the document shows revenue growth on different bases, so readers should check the original tables.

What Scentre does

Scentre owns and operates 42 Westfield destinations in Australia and New Zealand. Its portfolio was valued at $33.7 billion at Scentre's share, within $52.0 billion of Assets under management.

Income is mainly rent from retailers, called business partners, plus other income from the centres. Rent depends on occupancy, the rental level agreed at Lease renewal, annual escalations, and the sales retailers achieve in the centres.

Operating indicators

Occupancy was 99.8 per cent, which the company says is the highest since 2013. Over the 12 months, business partner sales were $30.3 billion, up 4.2 per cent. Specialty sales rose 5.1 per cent over six months and 5.4 per cent over 12 months in constant currency, while customer visitations totalled 347 million year to date, up 3.5 per cent, and 552 million over the 12 months to 23 August 2026.

Leasing was active, with 1,401 deals, specialty leasing spreads of 3.7 per cent and average rent escalations of 5.5 per cent. Trading continued into the second half: July 2026 total sales were up 2.7 per cent and specialty sales up 3.6 per cent, the company said.

Rent escalations and high occupancy are among the factors management points to behind the earnings growth. Its Westfield membership reached 5.2 million, up 11 per cent, and its Net Promoter Score was 65, up 12 points. These are company-reported indicators and were not independently verified.

Debt, funding and capital recycling

Gearing was 35.5 per cent. Net tangible assets were $3.71 per security, or $3.74 on an economic basis, and economic net asset value was $4.43 per security. Senior borrowings were $11.9 billion and subordinated notes $1.6 billion.

Interest cover was 3.6 times and debt to EBITDA 5.9 times. The average debt Margin fell from 2.6 per cent to 1.6 per cent and the weighted average Interest Rate was 5.4 per cent. Liquidity of $3.5 billion covers debt maturities until the second half of 2028, according to the company. Credit ratings are A from S&P and A2 from Moody's, both stable. Senior bank facilities of $1.7 billion were renegotiated and extended during the period.

During the half the company redeemed US$750 million of 2030 senior notes in March 2026, issued $750 million of six-year senior notes in April, and redeemed the remaining US$1.3 billion of subordinated notes in May. Interest rate hedging was 95 per cent at 3.26 per cent in June 2026, declining over time to about 25 per cent by late 2029.

Separately, a buyer identified in the presentation only as ART agreed to acquire 50 per cent of Westfield Mt Gravatt for $882.5 million at a 5.50 per cent cap rate, a 3.5 per cent premium to the December 2025 book value. The sale requires ACCC clearance and is expected to settle in the second half of 2026.

Development and land

Scentre is redeveloping Westfield Bondi in a $240 million project opening in stages from the fourth quarter of 2026, and has smaller projects at Penrith ($30 million, completing in the second half of 2027) and Tuggerah ($20 million, with retailers opening from the third quarter of 2026). It identifies more than $4.0 billion of future retail developments targeting a 6 to 7 per cent Yield and a 12 to 15 per cent incremental internal rate of return; these are targets, not outcomes. Scentre's share of the Penrith project is $15 million.

The company also holds over 670 hectares of land. Its potential dwelling pipeline rose from 20,200 to 25,600, including up to 1,600 at Warringah, 1,300 at Eastgardens, 4,000 at Chermside and 2,000 at West Lakes. These remain subject to planning approvals.

Guidance, separate from results

For FY26, Scentre guided to FFO of at least 23.79 cents per security, growth of at least 4.25 per cent, and distributions of 18.473 cents per security. The guidance depends on no material change in conditions.

Our own arithmetic: subtracting the 1H26 FFO of 11.73 cents from 23.79 cents leaves about 12.06 cents for the second half, consistent with the company's implied figure and growth of about 4.5 per cent. The second-half distribution implied by the full-year figure is 9.258 cents.

Risks and items to watch

Leverage is a central item to watch. Debt to EBITDA of 5.9 times and gearing of 35.5 per cent mean interest costs and valuations matter, and, on the company's own tables, hedging covers less of future debt over time, with about 5 per cent unhedged now.

Other items include ACCC clearance for the Mt Gravatt transaction, planning outcomes for residential projects, the delivery of Bondi, and whether sales growth continues beyond July 2026. The presentation includes footnotes referencing "December 2026" in debt and hedging data that appear to be typographical, which adds a caveat to those figures.