Westfield mall owner Scentre Group reports A$3.7b loss after property writedowns

New Zealand's biggest shopping centre owner, ASX-listed Scentre Group, suffered a A$3.7 billion full-year loss after the value of its malls was heavily written down.

The mall landlord with five Westfield-branded New Zealand centres, today reported a statutory loss of A$3.7b for the year ending December 2020, due in large part to the A$4.2b hit to the value of its malls.

The company said: "2020 reported sales and visitation have been impacted by the Covid pandemic which caused restrictions to trading during the year".

Scentre's A$25b of sales in 2019 fell to $22b in 2020.

It owns 51 per cent of Westfield centres at Albany, Newmarket, St Lukes, Manukau and Riccarton. The other 49 per cent is owned by a Singaporean government property investment fund.

Two years ago, Scentre managed the project to finish a $790m upgrade of Newmarket but it is yet to fully lease its show-case grand entranceway off the corner of Broadway and Mortimer Pass - an almost empty ground-floor corridor of shops ending at Auckland's first David Jones department store.

Today, Scentre revealed Newmarket got 10m shopper visits in 2020, compared to just 3.6m in 2019, so it has enjoyed a massive uplift in popularity since it spent $790m.

"A $790 million redevelopment, completed in 2019, has seen this living centre set a new benchmark as a world-class retail and lifestyle destination for New Zealanders. Incorporating multiple sites over four and half hectares, Westfield Newmarket is home to Auckland's first David Jones department store, a new format Farmers department store, a Countdown supermarket and more than 230 new specialty stores," the company said in the summary on that mall, now 88,150sq m and with 2504 carparks.

Westfield Newmarket got 10m shopper visits last year. Photo / Dean Purcell

The book value of that mall now stands at $1.15b, also a big uplift on what it had been. Newmarket has 257 retailers in a population area accessible by 1.4m people, the company said.

Farmers leases 9113sq m, David Jones 6609sq m, cinemas 6000sq m and Countdown 3719sq m. Total retail sales in 2020 were $397m but no comparisons were made with 2019 because the mall was being rebuilt then and was shut.

Since the Newmarket mall upgrade was finished, few shops have leased the ground-floor showcase entranceway which insiders said was designed as the showcase of new-to-New Zealand international fashion and designer brands. Covid has impacted that opportunity.

Scentre said today it operates 42 Westfield 'living centres' in Australasia which were 98.5 per cent leased. It completed 2625 leasing deals in the year, including bringing in 848 new shops.

"During 2020, we had more than 450m customer visits, spending A$22b with our retail partners. On average, customers spent approximately one and a half hours of their time each visit," the company said.

"Scentre Group owns seven of the top 10 centres in Australia and four of the top five centres in New Zealand," it said. Although it didn't say it, Kiwi Property's Sylvia Park shopping centre in Mt Wellington is ranked the largest by floor area in New Zealand and the reference to four out of five obliquely refers to Sylvia Park.

Scentre's portfolio is valued at A$33.1b of which New Zealand accounts for 4 per cent by value and 7 per cent by gross lettable area.

Scentre's 51 per cent of Westfield Albany was valued in December at $286.9m, Newmarket $589.7m, Manukau $188.7m, Riccarton $288.2m and St Lukes $206.6m.

Westfield Albany caters to a trade area population of nearly 420,000 residents, with a total accessible market of 920,000 residents.

It is leased to some of New Zealand's best-known retailers including Farmers, Kmart, New World, JB Hi-Fi and Event Cinemas and approximately 140 speciality stores.

The total retail spend in its trade area last year was estimated at $6.2b while the total retail spend in the main trade area was estimated at $3.4b.

"The total retail spend per capita for the Westfield Albany main trade area was estimated at $14,492 per annum in 2020, which is broadly in line with the Auckland region average of $14,009," Scentre said.

Scentre has long planned major development at Albany but the summary of that property released today made no mention of changes nor did it repeat previous images of developments above the mall.

Towers for offices or hotels were planned. So far none have risen.

Scentre chief executive Peter Allen said today: "We operate a business and brand that are important to our customers and essential to the community. Our business fundamentals remain strong and our strategy, focused on the customer, positions the group for long-term growth.

"2020 was a challenging year and I am proud of how our people adapted to the conditions, leading the industry and our business. We were proactive and deliberate in the decisions we made. Every Westfield living centre has remained open every day, providing our retail and brand partners the opportunity to connect with the customer," he said.

"During 2020, we had more than 450m customer visits, including an average of 46m per month during the fourth quarter. Customers spent approximately one and a half hours of their time on each visit," Allen said.

"We accelerated strategic customer initiatives such as our Westfield Plus membership program, which continues to grow and now has more than 1.2 million members.

"We trialled a number of initiatives, such as aggregated click + collect that facilitated our retail partners connecting with customers during periods of government restrictions. The learnings form the basis for strategic initiatives we are pursuing," he said.

Scentre is not listed on the NZX but on the ASX where it traded down around A$2.85.