Steering clear of Scentre Group
Steering clear of Scentre Group. Scentre Group's share price has increased around 10% since listing a couple of months ago after Westfield decided to split its domestic and overseas shopping centres. That's a nice return... yet we're not tempted. We wonder how much more rent can be squeezed from retailers that are struggling to increase revenue in the face of a structural shift to online shopping. From around 11.5% in 1995 to around 15.5% in 2012 Westfield (or Scentre) has been taking a larger cut of specialty store sales. Specialty stores pay about six times more rent per square meter than anchor tenants and provide the cream of Scentre's earnings. Any disruption to business as usual, such as retailers demanding and receiving rent forgiveness, which is already happening to keep shopping centres full, could impact Scentre's growth. At Scentre's current price, you're not being compensated for the risk. (VIEW LINK)
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