Changes are happening - please bear with us while we update our site.

Changes are happening - please bear with us while we update our site. Click here to give us your advice and feedback.

Scentre (ASX:SCG) Shares Rise On Asset Sale And Share Buyback

The Scentre Group (ASX:SCG) share price rose 1.5% today as it announced a large asset sale and a big share buy-back.

The Scentre Group (ASX: SCG) share price rose 1.5% today as it announced a large asset sale and a big share buy-back.

Scentre Group owns and operates 41 Westfield shopping centres in Australia and New Zealand, with Scentre’s interest valued at $39.1 billion, many of the shopping centres are owned in partnership with property investment institutions. According to Scentre Group, more than 535 million visits were made to its centres in 2018.

Scentre’s Asset Sale

Scentre announced that it has sold its Sydney CBD office towers to funds managed by Blackstone for $1.52 billion. The disposal will be effected by way of Scentre granting a 299-year leasehold interest to Blackstone over the office components. It will still retain ownership of Westfield Sydney and Sydney Tower.

With the cash raised from the sale and the joint venturing of Westfield Burwood, the shopping centre business has released $2.1 billion of capital to pursue its objectives.

One of the things that Scentre is going to do is launch a $800 million share buy-back which will increase its return on equity (ROE) while maintaining a “very strong balance sheet”.

Scentre Group CEO Peter Allan said: “The transaction price represents almost $800 million in additional value created compared to our investment cost and has generated an unlevered internal rate of return of over 16% per annum for the Group.”

Scentre will initially use the proceeds to repay debt. However, the transaction is expected to be dilutive to funds from operations (FFO) in 2019 by approximately 0.4 cents per share, which doesn’t take into the $800 million buy-back.

The forecast 2019 distribution remains unchanged at 22.6 cents per share, which represents a distribution yield of 5.7%. That’s not bad for a real estate investment trust (REIT) considering the yields of most other REITs have been compressed in recent months.

However, I think I would much rather buy shares of the reliable businesses in the free report below instead because I have concerns surrounding the growth of online shopping and what that will do to the value of Scentre’s shopping centres.

[ls_content_block id=”14945″ para=”paragraphs”]

[ls_content_block id=”18380″ para=”paragraphs”]

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Skip to content