Thank you for standing by, and welcome to the Scentre Group 2024 half year results update. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. Please note that this conference is being recorded today, Wednesday, the twenty-first of August, 2024, at 9:00 A.M., Australian Eastern Standard Time. I would now like to hand the conference over to Mr. Elliott Rusanow. Please go ahead. Thank you, and good morning, everyone. Welcome to Scentre Group's half year 2024 results briefing. Before we begin, I would like to acknowledge the traditional custodians of the land I am on this morning and pay my respects to their elders, past and present. I am joined today on the call by our Chief Financial Officer, Andrew Clarke, together with Lillian Fadel, Group Director of Customer, Community, and Destinations, John Papagiannis, Group Director of Businesses, and Stuart White, Director of Development, Design, and Construction. Our focus on delivering on our purpose of connecting and enriching communities and attracting more people to our Westfield destinations continues to deliver growth in both earnings and distributions. Funds From Operations were AUD 568 million for the first half, up 2%, and distributions to our security holders were AUD 0.086 per security, up 4.2%. Net operating income grew by 3.5% to AUD 1.006 billion for the first six months to 30 June 2024. Today's results have been made possible by the efforts and dedication of our team and the care they show to our communities and our customers. I would like to thank every member of the team for this in what has been a very difficult period for many since the devastating attack at Westfield Bondi on 13th April this year. Six innocent people lost their lives, and many others have been impacted across our community. We extend our deepest condolences to the families and loved ones of the victims and all those impacted by this attack. We continue to provide support, both financial and non-financial, to the victims' families as well as the victims injured during this attack. I would like to take this opportunity to thank our Westfield Bondi team, our business partners, emergency first responders, and the New South Wales Police for their assistance. We are very grateful for the support the local community has shown to each other and our team during this difficult period. Each of our 42 Westfield destinations are located at the heart of the communities they serve. They are unique places and play an important role in each community they serve. We continue to operate all our Westfield destinations with increased levels of security and are working closely with police, authorities, government, and industry on community safety initiatives. Our focus on creating more reasons for people to visit our destinations has seen 320 million visitations so far this year. This represents an increase of 1.9% or AUD 6 million more compared to the same period last year. This has provided our business partners the opportunity to increase their sales through our destinations. For the 12 months to 30 June 2024, our business partners have achieved a record AUD 28.6 billion of sales through our Westfield destinations. This is an increase of 2.9% or AUD 800 million compared to the same period in 2023. It is also 17.1% or AUD 4.2 billion more than in the same period in 2019. As a result, we continue to see strong demand from business partners wanting to take space at our destinations and connect with customers. During the first half, we completed 1,459 leasing deals and welcomed 550 new merchants, which included 98 new brands to our portfolio. Portfolio occupancy increased to 99.3% at 30 June, compared to 99% a year ago. Specialty rent escalations grew by 5.5%, and leasing spreads on new leases signed during the first half were positive 1.1%. Average specialty occupancy costs are now 16.9%, an increase from the 16.3% a year ago. We collected AUD 1.37 billion of gross rent during the first half, equivalent to 100% of billings and AUD 40 million more than the first half of 2023. Our Westfield membership program now has more than 4.1 million members, an increase of 600,000 compared to twelve months ago. We have the largest premium portfolio in the region, and investing in our destinations to ensure they remain the places people choose to spend their time is key to continuing our long-term growth. During the half, we have continued to progress our AUD 4 billion pipeline of future retail development opportunities. We commenced works to reconfigure department store space at Westfield Bondi, Westfield Burwood in Sydney and Westfield Southland in Melbourne. Works progress on the group's expansion of Westfield Sydney, on the corner of Market and Castlereagh Streets in Sydney's CBD, as well as the construction of the adjoining commercial and residential tower on behalf of Cbus Property. Our 42 Westfield destinations are located on more than 670 hectares of land holdings, close to where millions of people live and work, as well as existing and planned infrastructure. These substantial land holdings, combined with their strategic locations, has the potential to provide significant long-term growth opportunities for the group. We are now focusing on furthering, understanding, and unlocking these and other strategic opportunities. Operating as a responsible and sustainable business is an integral part of our strategy. We have in place long-term energy agreements across 88% of the group's portfolio, with the group on track to achieve Net Zero by 2030 for Scope 1 and 2 emissions. We have maintained our ESG ratings and have achieved gold employer status at the 2024 Australian Workplace Equality Index Awards, demonstrating our continued focus on diversity, equity, and inclusion. I will now hand over to Andrew Clarke. Thanks, Elliott, and good morning, everyone. Funds from operations for the six-month period was AUD 568 million or AUD 0.1095 per security, which grew by 2% compared to the prior corresponding period. The interim distribution for the period is AUD 446 million, or AUD 0.086 per security, up 4.2% and in line with guidance. Net operating income for the period was AUD 1,006 million. This is an increase of 3.5% over the first half of 2023. This consists of growth in property revenue of 5.1%, driven by CPI-linked specialty annual rental escalations of 5.5%, positive leasing spreads of 1.1%, and an increase in occupancy to 99.3%. The strong growth in property revenue is partially reduced by an increase in property expenses, primarily due to an increase in award rates for cleaning and security subcontractors, and as Elliott mentioned, increased levels of security across the portfolio. As a result of delivering strong cash collections, net operating income also includes an AUD 4 million release in the expected credit charge provision. This compares to an AUD 5 million release booked in the first half of 2023. Management fee income increased by AUD 2.4 million, or 9.9%, which includes additional fee income from the establishment of the Tea Tree Opportunity Trust. Overheads were AUD 47 million for the half year, compared to AUD 44.7 million in the prior corresponding period. This increase includes an investment in additional resources to progress strategic growth opportunities. The minority interest deduction reduced by AUD 5.5 million as a result of the AUD 174 million redemption of the Westfield Hornsby Property Linked Note. Project income has reduced from AUD 10.6 million in the prior corresponding period to AUD 3 million. The previous period included profit recognition for the Westfield Knox redevelopment. Operating and leasing capital was AUD 70 million for the first half. The group continues its proactive approach to capital management, including funding and interest rate exposure. At 30 June, the group had AUD 3.2 billion of available liquidity, and year to date, the group extended and established new bank facilities totaling AUD 1.9 billion. The fixed income and hybrid market conditions have continued to improve throughout 2024, and with this very constructive backdrop, today, the group has announced a tender offer for up to $550 million of outstanding non-call 2026 subordinated notes. The group intends to fund the repurchases through the issuance of new AUD subordinated notes, with the size conditional on the take-up of the tender offer. Details of the amount and pricing of the tender and the new issuance will be announced in due course. Our Distribution Reinvestment Plan continues to be in effect for the August 2024 distribution. The DRP will continue to add to the group's various sources of capital. During the period, the group identified the opportunity to leverage its platform and capability to successfully establish the AUD 310 million Tea Tree Opportunity Trust to purchase a 50% share in Westfield Tea Tree Plaza. The group continues to own the remaining 50% of the center. This transaction has resulted in alignment on the strategic asset plan between Scentre Group and its new co-owner, and delivers incremental fee income for the group, increasing the group's economic return on Westfield Tea Tree Plaza. The group is currently in the process of establishing a similar fund to acquire a 50% share in Westfield West Lakes, which is expected to complete in mid to late September. The weighted average interest rate for the six-month period was 5.6%. Included in this was an average base interest rate of 2.7% and an average margin of 2.9%. Excluding the subordinated notes, the weighted average interest rate was 4.7%. The group continues to actively manage its interest rate hedging position. Year to date, the group executed additional hedging of AUD 2.5 billion. As a result, interest rate hedge coverage at June twenty twenty-four is 89%, with an average base rate of 2.44%, and 89% at December twenty twenty-four, with an average base rate of 2.93%. The weighted average interest rate for twenty twenty-four is expected to be approximately 5.7%. The statutory result was a profit of AUD 404 million, which includes an unrealized property revaluation decrease of AUD 120 million. All properties were revalued during the half year, of which approximately 50% were externally valued. Overall, property valuations decreased by 0.1% during the period, driven by an average seven basis points softening of capitalization rates, which was largely offset by growth in net operating income. The weighted average capitalization rate for the portfolio was 5.42% at June 2024, compared to 5.35% at December 2023. We've provided on slide 26, a summary of the values by property. Thank you, and I'll now pass you back to Elliott for closing remarks. Thank you, Andrew. The group has continued to deliver earnings and distribution growth in the first half of 2024, per share and in absolute terms. We have done so since the early months of the COVID pandemic, and we are focused on continuing to do so, moving ahead. Subject to no material changing conditions, the group reconfirms that it expects FFO to be in the range of AUD 0.2175-AUD 0.2225 per security for 2024, representing 3%-5.4% growth for the 2024 year. Distributions are expected to be at least AUD 0.172 per security for 2024, representing at least 3.6% growth for the year. I'll now open the call for questions. Thank you. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Richard Jones from J.P. Morgan. Please go ahead. Good morning, guys. Just wondering if we could get some more color just on the sub note tender offer. Can you just let us know where they're trading today and what the implied offer price will be versus the current trading price, and any penalties, if there are, in place for early repayment? Yeah, thanks, Richard. It's Andrew here. So, look, what we've seen in the market is that, as I said in my presentation, that we've seen year to date 2024, significant improvement in the hybrid market, so we have seen continued compression in the credit spreads. To put it in perspective, since we issued our hybrids that are still trading, since we issued them in September 2020, they've compressed by circa 200+ basis points over that time. We've also seen in the U.S. dollar hybrid market that our hybrid notes have compressed over that period by 140-150 basis points, so you can see that there's been a significant improvement. Today, we're launching the tender offer, and so we expect to buy those notes back at a small premium to where the notes are trading, but still at a slight discount to the face value of the original notes. Why is $550 the number? What we're doing is, as we said, it's a conditional offer. So it's based on what we think is an appropriate level of notes to issue in the Australian market. So we wanna make sure that we match the tender offer with the expected new issuance. So we're effectively replacing sub notes for sub notes, and that way, we're able to maintain the 50% equity credit that we get on the notes. And so we've decided to do that level in line with where the expected level of demand is in the Australian dollar market. Okay, and there's no penalties from early repayment? No. No, this, this is over and above the ability that we have every twelve months to buy back 10% of the existing sub notes, and because we're replacing them with new subordinated notes, it means that, as I said before, we can maintain the equity credit. Okay, so you then, all things being equal, likely repurchase another 10% come November, December? I'm not gonna guide you to that. It all depends on where market conditions are and what we want to do at that point in time. Okay. But we have the capability to do that at the 12-month anniversary. Thanks, Andrew. Thank you. Thank you. Your next question comes from Caleb Wheatley, from Macquarie. Please go ahead. Good morning, Elliott and Andrew. Thank you for taking my questions. Just a follow-up on the tender offer. You've previously spoken to looking at some JV opportunities as well, across the remaining portfolio. Just in consideration of that previous commentary, how do we align that with the replacement of the tender offer today? Well, I'll start and then Andrew can add. Look, we've been consistent in stating that one of our funding sources that we have available to us is the potential of the joint venture our assets. We still look to that as one of the sources of capital long term, but I think what we're announcing today is another source of capital for our capital stack longer term. And so it's just highlighting there's a variety of sources that we have as a group to fund the business, without needing to issue equity in the ordinary sense, and particularly highly dilutive equity at the bottom of the market, which is what we've managed to do through the pandemic. And that's, I think, what's driving, besides obviously very strong focus on our strategy in driving revenue growth, being able to deliver consistent growth in earnings per share and distributions per share in absolute terms. No rebasing, no resetting, just growth. Great. Thank you, and then, can you able to provide some broader commentary just on capital demand for larger retail assets? Obviously, you've flagged a couple of the retail partnerships that were established over the past six months, so clear there's demand on that side. Just keen to see how or hear how broader insto interest in retail assets are, please? Yeah, hi, Caleb. Andrew here. I think it's good that you pointed that out, that we have established the Tea Tree Opportunity Trust, and I think that's an example of being active where the active capital is at the moment and diversifying the potential capital partners that we have across the group. So, it's fair to say that that private capital market has been much more active in the current environment, and so we took the opportunity to establish that the trust. We are also, as we've mentioned before, we have 12 assets we own 100% share of. Those 12 assets are worth circa AUD 19 billion-AUD 20 billion. Over time, we would expect that we will joint venture some of those assets. That is something that we continue to look at and pursue. At this stage, there's not a lot of activity from large institutional investors or superannuation funds, both domestic and foreign. I would say the inbound inquiries continue to be there, but the decision-making and around investment in retail real estate is still. They're not completely there at this stage. But again, it's a time in the cycle. Great. Thank you. And just a final one from me. Just on the re-leasing spreads, seems like they've come back from about mid-3% in the second half of last year to +1%, so still positive. But just, keen to hear if you can provide any further detail on the drivers of that moderation, and how you're thinking about those over the second half of the year, please. Yeah, I think that if you think about it, there's a number of dynamics that go into what the re-leasing spread eventually is, particularly the escalations that occurred during the period. Also depends on what stores are expiring and what business partners are expiring and what we replace them with or renew with. So you know, as we've said consistently over a long period of time, those numbers of re-leasing spreads do bounce around. It's not a major focus for us. I think what's more important to us is the overall income that we're able to generate from each of our destinations and overall too as a business. So, I think it's an indication, though, that what we, what we did say, six and 12 months ago is that we see the opportunity, given the level of productivity that's being achieved by our business partners through the portfolio, to increase our occupancy costs from what was 16%, to back to where it was historically, towards that 18% and 19%. And when it was 18% and 19%, it was on much lower productivity than we see today. So, we would see that those favorable conditions, low supply of new space, combined with high productivity, it will drive, continued growth in overall rents and income for the business. Great. Appreciate the call. Thank you. Thank you. Thank you. Your next question comes from Tom Beadle from UBS. Please go ahead. Morning, Elliott and Andrew. Just wanted to ask around the JV that you're doing at Tea Tree and Westfield West Lakes. Just be interested in how you see the prices of those transactions and versus your book value. And, yeah, just the sort of what you're seeing across the valuations on the portfolio. The cap rate didn't obviously move much. Yeah. Hi, Tom, Andrew here. Look, we see the pricing on that as fantastic if you're the purchaser. I think, basically, when you've got to look at it, that you've got a motivated seller that is selling those assets in order to satisfy redemptions within a wholesale fund. So, I wouldn't say the pricing, particularly on those assets, is necessarily indicative of the entire portfolio and, sorry, the entire market. Actually, those assets were independently valued post the pricing being set on the assets, and the independent valuers actually looked through the pricing on the transactions because of the nature of the sale and understanding the motivation behind the sale. So the, you know, that's partly why we established the funds as they, you know, that we think they're extremely good buys at the pricing that was available. Okay, great, thanks. And then just on the various metrics throughout the presentation, I think one of your peers had 53 weeks in the year. I just wondered if the numbers were sort of like, truly like for like from a timing perspective? ... Yeah, the, I think there is sometimes with some of the, I think it's with the majors, the either department stores or the, discount department stores, they sometimes do add an extra week, for a period, but then they've. It's to adjust for other periods. So, I think that, overall, actually doesn't have a material impact on our sales numbers. It's a. I think there was a small basket that might have been the additional 50, like, the additional week. But it does correct itself over a year period. The other thing to note is that, our sales numbers, they're not, we're not presenting comparable sales or comparable NOI, where we're presenting absolute sales, absolute NOI. So as we noted, we are doing some downsizing of David Jones' space right now at Burwood, Bondi, and Southland, and we're completing a similar thing of there, of DJ's previous space at Mount Gravatt. And we have not excluded or taken that out of our sales numbers. So the other component to note is that 2019, so that comparison that I gave to 2019, also had this exact same issue, but also included Mount Gravatt, Bondi, Burwood, Southland, Tea Tree, Carindale, David Jones, and I've lost, forgotten one, but- Mount Gravatt? Yeah, I did say Mount Gravatt. Yeah. So, it's definitely. Well, it's actually, it's very hard. We haven't done a what you would call a comparable. It's just a absolute change. So there's nothing excluded, nothing not included, on both the income side or the sales side. Okay, that's, that's very clear. Thanks. And then just a final one. The occupancy's ticked up to 99.3%. Is that pretty much as good as it can get? Like, is that sort of frictional vacancy, I guess you'd call it? Well, 99.3% is, you're right, it was the 2019 number was 99.3%, but our aspirations would be for that to increase. I'm looking at, as I said, John Papagiannis has joined us for this call, and he knows the expectations are for occupancy to improve. And I would say that, there's not a huge amount, well, there's actually very little space being added, and so our expectation is that we would be pushing our occupancy above 99.3%. So no, I wouldn't agree with. I wouldn't subscribe to the notion that 99.3% is as good as it gets. I think 100% is as good as it gets, to be honest. Okay, thanks. Thank you. Your next question comes from James Druce from CLSA. Please go ahead. Yeah, hi, good morning, Elliott. Just wanted to clarify a couple of things. What are the leasing spreads on new leases and renewals? So we've provided that, which is 1.1% on the, yeah. So the split. Well, I was looking it up right now. I think they're actually quite consistent, to be honest, but we can provide that after the call. Okay. And then just your comment on occupancy costs and productivity. Are you kind of suggesting that you could push occupancy costs higher than what you have historically, or you just think there's ample room to move from here? I think that even if we pushed it to where it was historically, it still drives a lot of growth for our security holders, which is what we're focused on. But I think that the notion that productivity is a lot higher would suggest that given that there's a huge marginal benefit as productivity increases, because the incremental dollar that's made by our business partner over a certain threshold is really being done at gross profit margin, which is materially higher than net profit margin, which suggests that we could potentially go even higher than what we have historically, given the relative growth in the productivity compared to when we were at historically 18% or 19% occupancy costs. Okay, so that's a retailer margin argument. You reckon the margin, the retailer is making bigger margins at the moment, or just an absolute level, they're making more dollars, so you can just charge more? I think it's the absolute dollars they're making more. So- Okay. and as I said, when we were at 19%, I think productivity was around AUD 10,000 per sq m. We are 12.5. Yeah, AUD 12,500 per sq m right now. So, and we're materially lower than what the historical occupancy cost was. Yeah, okay. And then just on, just sounded like, I think it was Tom's question. You're saying that the value is essentially excluding the syndicates that you've done from sales evidence, so they're not really treating that as an arm's length transaction? Yeah. Hi, James, Andrew here. Look, I think they're considering it, but they're not saying that just because the asset sold at a lower price, that that doesn't mean that the valuation needs to move to the transaction price. They're saying that there's other factors involved. So it's definitely a consideration. These are not the only two assets that have sold at relatively discounted prices into syndicated funds. But yeah, we've now, as I said, West Lakes is the other fund that we're in, establishing a similar fund at the moment, and we've received an independent valuation. And again, it's slightly higher than the transaction price. ... What I would add is that, sorry, James, there's a reason why it's called the Opportunity Fund, because it provides a fantastic opportunity. And I can tell you that the equity demand has been very, very, very strong, to the extent that we've had to do substantial scalebacks. Because you have an incredibly motivated or forced seller, and that provides the opportunity for us to effectively create a syndicate to co-own the center that we already manage, but in a way that's very aligned to us executing our strategic plan for those, for certainly Tea Tree and hopefully very soon, West Lakes. Okay. And would you expect the Joondalup transaction 6.25% cap rate to have an effect on your WA assets? No, we've... I think we've valued those as well. So, I think the answer would be no. I think that, obviously the seller there was, had very well flagged that they want to, exit. Be interesting to see what the, existing joint venture partner to Vicinity will want to do because of, you know, what we're seeing in the unlisted institutional syndicate space and the desire to have redemptions or not. And so we're not really in a market which has an arm's length, buyer and seller on, you know, in normal terms. I think there's a lot of other factors that are at play at the moment. And that is creating opportunities, for acquirers of assets to, to acquire at, yeah, good returns. Certainly, that we saw that with Tea Tree and at West Lakes. I can't comment on Joondalup because we didn't really look at that. So, I don't expect it would have an impact, given the nature of the market at the moment. Okay. Thank you. Thank you. There are no further questions at this time. I'll now hand back to Mr. Rusanow for closing remarks. Thank you for joining our call today. I actually think there might be one more question it looks like if... Is it? Am I wrong on that, or that's... Got the operator? We do have a question from Lauren Berry- Yeah. from Morgan Stanley. Please go ahead. Hi. Thanks, guys. Just on your guidance, you reaffirmed. Was just wondering if you had factored in the potential benefit from repricing or reissuing the sub notes in the guidance statement, please? Hi, Lauren. Andrew here. Look, we haven't specifically. We have provided guidance, so there is guidance with a range. So it is within that range in the event that we successfully complete those transactions. It's fair to say that transaction will be immediately accretive to earnings. So, it's within the range. Mm-hmm. And, are you assuming a fee for the establishment of the West Lakes Fund? Yes, we will, we'll generate similar. Well, the structure of the fees are very, well, actually the same as the Tea Tree Opportunity Trust. The size of the investment is smaller, so it's around AUD 170 million fund as opposed to AUD 310 million fund. So the fees are based on the, the scale of the size of the gross asset. So, but we'll get similar fee income streams from that asset. Okay, great. Thanks, guys. Thank you. Thank you. Okay, so thank you for joining our call today. If you have any further questions, please reach out, and we hope you have a good day and hope to see you soon. Thank you. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.