Scentre Group (ASX: SCG) shares are in the spotlight today after the company released an operating update. Those seeking passive income and capital growth may be interested in this S&P/ASX 200 Index (ASX: XJO) company.
Progress on key metrics
Scentre Group announced positive results in several key areas.
The company reported that, during the 18 weeks prior to 4 May, customer visits to its shopping malls had increased 2.3% to 179 million.
This boosted sales for stores within these locations.
The Group said:
Our business partners achieved $6.7 billion of sales in the 3 months ended 31 March 2025, up from 2.8% compared to the same period in 2024…on a rolling 12-month basis to 32 March 2025, our business partners achieved record sales of $29.1 billion.
Scentre Group also advised it had completed the make-whole redemption of all remaining Subordinated Non-Call 2026 Fixed Rate Reset Notes totalling $1.0 billion. This was funded using $350 million of undrawn bank facilities and a newly issued $650 million Subordinated Non-Call 2031 Note at a 2.0% margin.
Expansion plans progressing well
The ASX 200 real estate company also provided an update on its expansion plans.
In March, based on the NSW Housing Delivery Authority process, Westfield Warringah was declared a state significant development, with the potential for up to 1500 dwellings.
Commenting on this opportunity, Scentre Group CEO Elliot Rusanow said:
This is a significant opportunity for our business and gives us the option to use an accelerated planning process to deliver growth. We continue to collaboratively participate in state and local planning processes to secure similar opportunities across many of our destinations during 2025 and beyond.
Scentre Group also advised that the expansion of Westfield Sydney CBD is progressing well, with new luxury brands expected to open from this month.
Should investors consider Scentre Group?
As the owner of 42 Westfield centres across Australia and New Zealand, Scentre Group has an attractive property portfolio. This includes seven of Australia's ten most visited malls, as of 2023.
Following the pandemic, there was widespread concern about the future of brick and mortar stores as consumers embraced online shopping. While e-commerce continues to accelerate in Australia, Scentre Group continues to attract customers to its malls. Last year, Scentre's occupancy rate (percentage of stores leased) reached 99%, the highest in five years.
Being a real estate investment trust (REIT), Scentre Group has a sizable amount of debt on its balance sheet. The Reserve Bank of Australia is expected to deliver several rate cuts this year, which would reduce Scentre Group's interest payments and boost profitability.
Scentre Group shares are up 5.2% for the year to date, outpacing the ASX 200 Index, which is down 0.2% over the same period. Scentre Group's five-year track record is also impressive, having risen 66.8%. With a forward dividend yield of 4.7%, Scentre Group shares are also likely to appeal to passive income-oriented investors.
