Scentre Group Sells 50% of Westfield Mt Gravatt to Australian Retirement Trust for A$882.5 Million

Scentre Group (ASX: SCG) settled the sale of a 50% interest in Westfield Mt Gravatt in Brisbane to joint venture partner Australian Retirement Trust (ART) for $882.5 million, the company said in an operating update released Nov. 4. The settlement took place in late September.

Westfield Mt Gravatt Sale to Australian Retirement Trust

The $882.5 million consideration comprises $870 million for the 50% property interest and $12.5 million for a 50% interest in adjacent land. The property component implies a 5.50% capitalization rate and a 3.5% premium to the December 2025 book value.

Scentre Group will continue as property, leasing and development manager for the centre while retaining a 50% interest. Management said proceeds would initially be used to repay bank debt, making the transaction part of Scentre Group's capital-management strategy rather than a full exit from the Brisbane asset.

In a separate capital-management step, Scentre Group issued US$750 million (A$1,079 million) of 10-year guaranteed senior notes in October. The company said principal and interest payment obligations on the notes were swapped to a floating-rate Australian dollar liability at a margin of 141 basis points over 3-month BBSW.

Westfield Operating Performance

Scentre Group Chief Executive Officer Elliott Rusanow said the company welcomed 452 million customer visitations to its Westfield destinations from the start of the year to Nov. 1, an increase of 3.2%, or 14 million, on the prior comparable period. Visitation over the past 12 months was 554 million, up 17 million, or 3.1%.

Total annual business partner sales across the portfolio to Sept. 30 were $30.5 billion, up $1 billion from the same period in 2025. For the three months ended Sept. 30, business partners recorded sales growth of 3.5%, with specialty store sales up 4.6%.

Portfolio occupancy stood at 99.8%, which the company said is its highest level in more than a decade. Scentre Group achieved average specialty rent escalations of 5.6% in the nine months to Sept. 30 and completed 2,085 leasing deals at average specialty releasing spreads of +3.7%. Westfield membership grew 10.8% to 5.4 million.

Annual tenant sales across the portfolio have risen from $22.9 billion in 2022 to more than $30 billion in 2026, while occupancy has increased from 98.8% in June 2022 to 99.8%. First-half 2026 Funds From Operations (FFO) reached $612 million, up 4.4%, and distributions rose 4.9% to 9.215 cents per security.

Redevelopments and Strategic Land

Scentre Group reported progress on three redevelopment projects in New South Wales:

• Westfield Bondi, Sydney: A $240 million redevelopment (Scentre Group share $240 million) is adding an elevated dining, entertainment and lifestyle precinct on Level 6, anchored by an upgraded Event Cinemas and a new Kingpin entertainment offer opening in December. The remainder, including dining venues, will open progressively from 2027.
• Westfield Penrith, Sydney: A $30 million redevelopment (Scentre Group share $15 million) is expanding the entertainment and lifestyle precinct and HOYTS Cinemas complex. It is fully leased and will open progressively from the second quarter of 2027.
• Westfield Tuggerah, NSW Central Coast: A $20 million redevelopment (Scentre Group share $20 million) is repurposing the former David Jones space. JD Sports and rebel are open, with visitation up 6.2% in the eight weeks since opening. TimeZone is due to open in the second quarter of 2027.

At Westfield Eastgardens in Sydney, the company's expression of interest has been accepted for progression as a State Significant Development through the NSW Housing Delivery Authority. The proposal has the potential to deliver up to 1,300 dwellings. Scentre Group said it continues to progress planning proposals across its strategic land holdings.

David Jones Exposure

Scentre Group addressed recent media reports regarding David Jones and its owner, Anchorage Capital Partners. David Jones occupies about 200,000 square metres across 17 Westfield destinations.

Gross rent from those stores in calendar 2026 is $45 million (Scentre Group share), or $352 per square metre, compared with the portfolio average of $942 per square metre for all stores. That represents approximately 1.8% of the group's gross rent and about 3.6% of FFO on an annualized basis.

David Jones has provided $45 million in bank guarantees across the Westfield Australia/New Zealand portfolio, of which Scentre Group's share is approximately $30 million, equivalent to eight months of gross rent. The guarantees can be applied against unpaid rent and were put in place as a condition of Scentre Group's approval of Anchorage Capital Partners' 2023 acquisition of David Jones. David Jones paid all rent up to Sept. 30, the company said.

Guidance and Market Context

Subject to no material change in conditions, Scentre Group reaffirmed its target for 2026 FFO of at least 23.79 cents per security, representing growth of at least 4.25%. Distributions are expected to grow 4.25% to 18.473 cents per security.

The Mt Gravatt pricing, a 5.50% cap rate and a premium to book value, points to continued institutional demand for prime regional retail assets in Australia. The transaction lets Scentre Group realize value from a fully leased centre while keeping a 50% ownership stake and its management role, and the company is directing proceeds first to bank debt as it continues its redevelopment program.

Sources

• Scentre Group Operating Update: https://www.scentregroup.com/news-and-media/latest-news/scentre-group-q3-2026-operating-update