1 00:00:05,720 --> 00:00:08,360 Speaker 1: Welcome to Fear and Greed Business Interview. I'm suan Alma. 2 00:00:08,560 --> 00:00:11,720 Speaker 1: Center Group this week outlined a strong result across it's 3 00:00:11,760 --> 00:00:15,840 Speaker 1: forty two Westfield malls, more than doubling first half net profit. 4 00:00:16,200 --> 00:00:18,919 Speaker 1: Customer visits are up significantly too, and the group is 5 00:00:18,920 --> 00:00:21,920 Speaker 1: now striking leasing deals with retailers at levels above their 6 00:00:21,960 --> 00:00:24,880 Speaker 1: previous frinds. This earning season, we're working with a team 7 00:00:24,880 --> 00:00:27,080 Speaker 1: at Osby's to bring you interviews with the leaders of 8 00:00:27,120 --> 00:00:31,240 Speaker 1: some of Australia's biggest companies. Osbiz is Australia's leading provider 9 00:00:31,280 --> 00:00:34,040 Speaker 1: of live and on demand video of the latest news 10 00:00:34,120 --> 00:00:38,239 Speaker 1: in Australian business markets, economy and startups. Sign up at 11 00:00:38,240 --> 00:00:42,040 Speaker 1: osbiz dot com todayu It's free. Juliet Sally spoke with 12 00:00:42,159 --> 00:00:45,920 Speaker 1: Center Group CEO earlier at Rosenau this week about the 13 00:00:45,960 --> 00:00:49,760 Speaker 1: results about repurposing mall space previously used by David Jones 14 00:00:50,120 --> 00:00:55,520 Speaker 1: and the lasting impacts of the Westfield Bondai stabbing attacks. 15 00:00:57,880 --> 00:00:59,960 Speaker 2: Just ask you, I guess in terms of your profit 16 00:01:00,080 --> 00:01:02,040 Speaker 2: of four hundred and four million dollars, so what was 17 00:01:02,080 --> 00:01:04,680 Speaker 2: that unrealized property valuation? And I guess what are the 18 00:01:04,720 --> 00:01:06,080 Speaker 2: highlights for the first half? 19 00:01:07,319 --> 00:01:12,240 Speaker 3: Yeah, so our profit statutory profit does include the unrealized 20 00:01:12,360 --> 00:01:16,280 Speaker 3: property revaluations as part of the accounting rules. But the 21 00:01:16,319 --> 00:01:18,759 Speaker 3: focus for our profit is really what we call funds 22 00:01:18,800 --> 00:01:22,240 Speaker 3: from operations, which was five hundred and sixty eight million 23 00:01:22,280 --> 00:01:24,920 Speaker 3: dollars for the first half, which was up two percent, 24 00:01:25,440 --> 00:01:29,479 Speaker 3: and we're guiding for full year growth of four funds 25 00:01:29,480 --> 00:01:32,440 Speaker 3: from operations of between three to five point four percent 26 00:01:32,520 --> 00:01:35,479 Speaker 3: for the full year to December of twenty twenty four. 27 00:01:36,480 --> 00:01:38,959 Speaker 2: So what are you expecting in terms of what will 28 00:01:39,000 --> 00:01:41,640 Speaker 2: help drive some of that growth for the remainder of 29 00:01:41,680 --> 00:01:42,000 Speaker 2: the year. 30 00:01:43,080 --> 00:01:46,679 Speaker 3: Yeah, So our focus is on providing people a reason 31 00:01:46,720 --> 00:01:49,040 Speaker 3: to come and spend their time at our destinations, and 32 00:01:49,440 --> 00:01:51,760 Speaker 3: we've seen the benefit of that play out in the 33 00:01:51,760 --> 00:01:55,040 Speaker 3: first half of this year where we've welcomed so far 34 00:01:55,120 --> 00:01:58,920 Speaker 3: this year until last Sunday, three hundred and twenty million 35 00:01:59,000 --> 00:02:02,920 Speaker 3: customer visits. That's an increase of six million, or one 36 00:02:02,920 --> 00:02:06,559 Speaker 3: point nine percent more than the corresponding period last year, 37 00:02:07,080 --> 00:02:10,600 Speaker 3: and that's led to twenty eight point six billion dollars 38 00:02:10,639 --> 00:02:14,080 Speaker 3: of sales that being generated by our business partners to 39 00:02:14,160 --> 00:02:17,000 Speaker 3: thirty Jun. For that twelve month period to thirty Jun 40 00:02:17,040 --> 00:02:20,280 Speaker 3: of twenty twenty three, twenty twenty four. I'm sorry, and 41 00:02:21,040 --> 00:02:27,160 Speaker 3: that level of productivity is driving an increasing demand for space. 42 00:02:27,320 --> 00:02:30,400 Speaker 3: With our occupancy increasing now to ninety nine point three percent, 43 00:02:31,720 --> 00:02:34,400 Speaker 3: leading to higher rents, it's leading to growth in our 44 00:02:34,480 --> 00:02:37,080 Speaker 3: net operating income of three point five percent for that 45 00:02:37,160 --> 00:02:41,000 Speaker 3: six month period, and that's leading to growth in earnings, 46 00:02:41,040 --> 00:02:44,079 Speaker 3: in both earnings and distributions through our security holders. 47 00:02:44,480 --> 00:02:49,160 Speaker 2: So, with occupancy near capacity, what's in the pipeline for 48 00:02:49,240 --> 00:02:50,880 Speaker 2: further I guess growth here. 49 00:02:51,800 --> 00:02:52,600 Speaker 1: I think that the. 50 00:02:54,280 --> 00:03:00,400 Speaker 3: Opportunity for us is to further increase our occupancy. We 51 00:03:00,400 --> 00:03:04,040 Speaker 3: we can run at higher Ocupycity what we run at today, 52 00:03:05,000 --> 00:03:08,880 Speaker 3: as well as push the costs of that occupancy. So 53 00:03:10,160 --> 00:03:13,080 Speaker 3: this time last year, our occupancy cost so this is 54 00:03:13,160 --> 00:03:16,120 Speaker 3: the ratio of rent to sales that our business partners 55 00:03:16,160 --> 00:03:20,520 Speaker 3: pay us, we're sixteen point three percent. We've been able 56 00:03:20,560 --> 00:03:25,280 Speaker 3: to increase that to sixteen point nine percent at this period, 57 00:03:25,560 --> 00:03:28,440 Speaker 3: and we see a great opportunity to further increase that. 58 00:03:29,160 --> 00:03:32,880 Speaker 3: The peak of rent to sales or that occupancy costs 59 00:03:33,160 --> 00:03:37,880 Speaker 3: actually was nineteen percent. And at that time we're talking 60 00:03:37,880 --> 00:03:41,320 Speaker 3: about ten years ago. The productivity that was being achieved 61 00:03:41,360 --> 00:03:45,560 Speaker 3: by our specialty retailers was ten thousand dollars a square 62 00:03:45,600 --> 00:03:48,040 Speaker 3: meter and they're now generating twelve and a half thousand 63 00:03:48,080 --> 00:03:51,760 Speaker 3: dollars a square meter. And that higher level of productivity 64 00:03:52,240 --> 00:03:55,880 Speaker 3: is being done at a higher margin for our business partners, 65 00:03:56,040 --> 00:03:58,240 Speaker 3: which means that they have a propensity to pay a 66 00:03:58,320 --> 00:04:02,160 Speaker 3: higher level of those sales in rent to us. And 67 00:04:02,200 --> 00:04:06,880 Speaker 3: that's the really two factors that will drive earnings growth 68 00:04:06,920 --> 00:04:09,839 Speaker 3: for US, as well as US focusing on driving more 69 00:04:09,880 --> 00:04:14,480 Speaker 3: and more customer visitations and time dwelt at our destinations. 70 00:04:15,320 --> 00:04:18,440 Speaker 2: Do you expect rents to continue to grow at the 71 00:04:18,520 --> 00:04:21,240 Speaker 2: level that you saw over last year, particularly given that 72 00:04:21,560 --> 00:04:23,919 Speaker 2: we could be seeing high interest rates for longer. 73 00:04:25,200 --> 00:04:27,680 Speaker 3: Yeah, we do, and the reason for this is because 74 00:04:27,720 --> 00:04:33,320 Speaker 3: of our strategy of driving customer visitations. Where driving customer visitations, 75 00:04:33,800 --> 00:04:37,680 Speaker 3: it's leading to record amounts of productivity that's been generated 76 00:04:37,680 --> 00:04:40,880 Speaker 3: by our business partners. There's less amount of space that's 77 00:04:40,920 --> 00:04:45,760 Speaker 3: available to business partners to connect with that customer, and 78 00:04:46,120 --> 00:04:50,040 Speaker 3: that dynamic of supply and demand or lack of supply 79 00:04:50,240 --> 00:04:55,920 Speaker 3: increasing demand is leading to the ability the ability to 80 00:04:55,960 --> 00:04:58,680 Speaker 3: grow our revenue through increasing rents. 81 00:05:00,080 --> 00:05:02,680 Speaker 2: I did ask about your pipeline. You've got four billion dollars. 82 00:05:02,760 --> 00:05:06,120 Speaker 2: I believe in future retail development opportunities just tell us 83 00:05:06,120 --> 00:05:06,960 Speaker 2: about some of these. 84 00:05:07,920 --> 00:05:14,159 Speaker 3: So our focus is on repurposing existing space from what 85 00:05:14,400 --> 00:05:20,560 Speaker 3: might be there now to something that is more wanted 86 00:05:20,560 --> 00:05:24,000 Speaker 3: by our customers. An example of that is what we're 87 00:05:24,000 --> 00:05:28,800 Speaker 3: doing at Bondai Burward Southland, similar to what we've done 88 00:05:28,839 --> 00:05:33,080 Speaker 3: at malt Gravat, where we've downsized or seen the exiting 89 00:05:33,120 --> 00:05:36,679 Speaker 3: of David Jones at Maltcravat, but downsizing and the others 90 00:05:36,680 --> 00:05:42,960 Speaker 3: that are named and reusing that downside space for space 91 00:05:43,080 --> 00:05:46,600 Speaker 3: that is more aligned to where people are spending their 92 00:05:46,640 --> 00:05:49,200 Speaker 3: time and spending their money on. In the case of Bondai, 93 00:05:50,279 --> 00:05:54,279 Speaker 3: the ground level of the David Jones store is actually 94 00:05:54,320 --> 00:06:00,760 Speaker 3: being repurposed into a new, fully interactive, new line sports 95 00:06:00,760 --> 00:06:05,280 Speaker 3: store and a first to mark a premium Virgin gym operation. 96 00:06:06,279 --> 00:06:10,000 Speaker 3: At the same time, David Jones is actually refurbishing and 97 00:06:10,080 --> 00:06:13,640 Speaker 3: upgrading their existing smaller space at Bondi. So that's just 98 00:06:13,680 --> 00:06:17,919 Speaker 3: one example which we're seeing repeated across the number of 99 00:06:17,920 --> 00:06:21,120 Speaker 3: our centers and will continue. We believe to see that 100 00:06:21,279 --> 00:06:26,839 Speaker 3: repurposing of existing space into a different style of what 101 00:06:27,160 --> 00:06:29,640 Speaker 3: goes on in that space. As we move forward into 102 00:06:29,720 --> 00:06:32,680 Speaker 3: our into the future years now. 103 00:06:32,680 --> 00:06:36,000 Speaker 2: You've also mentioned that you expect distributions to grow for 104 00:06:36,040 --> 00:06:39,440 Speaker 2: the full year. What sort of payment levels can shareholders expect. 105 00:06:40,400 --> 00:06:43,680 Speaker 3: Yeah, so we have a guy that to distributions for 106 00:06:43,760 --> 00:06:46,599 Speaker 3: the full year of being at least seventeen point two 107 00:06:46,600 --> 00:06:51,200 Speaker 3: cents per security and we see that as earnings continue 108 00:06:51,240 --> 00:06:56,600 Speaker 3: to grow, that distribution will also continue to grow. And 109 00:06:56,680 --> 00:07:02,040 Speaker 3: so we're very focused on growing in absolute terms without 110 00:07:02,080 --> 00:07:06,920 Speaker 3: rebasing and without resetting earnings, both our earnings and our 111 00:07:06,920 --> 00:07:10,920 Speaker 3: distributions this year and in the future years to come 112 00:07:11,720 --> 00:07:14,120 Speaker 3: over the long term, because we are a high cash 113 00:07:14,120 --> 00:07:17,560 Speaker 3: flow generating business, and so we see the opportunity of 114 00:07:17,920 --> 00:07:22,640 Speaker 3: further increasing our distributions into the future years. 115 00:07:22,440 --> 00:07:25,679 Speaker 2: Now, Elliott, you mentioned before Westfield Bonder, which of course 116 00:07:25,880 --> 00:07:28,680 Speaker 2: was the scene of a devastating attack back in April. 117 00:07:28,680 --> 00:07:32,320 Speaker 2: Our thoughts with your staff member who did lose his life. 118 00:07:32,560 --> 00:07:36,080 Speaker 2: What is the security like now at in terms of 119 00:07:36,160 --> 00:07:38,440 Speaker 2: all your operations and all your centers. 120 00:07:39,760 --> 00:07:44,520 Speaker 3: Yeah, April the thirteenth saw a very devastating event occur 121 00:07:45,240 --> 00:07:48,000 Speaker 3: where six people, six innocent people, lost their lives and 122 00:07:48,040 --> 00:07:52,320 Speaker 3: many people were injured. One of those, as you pointed 123 00:07:52,320 --> 00:07:56,360 Speaker 3: out was a member of our team for us and 124 00:07:56,480 --> 00:08:00,000 Speaker 3: our deepest condolences remain with the families. 125 00:07:59,480 --> 00:08:00,160 Speaker 1: Of the victor. 126 00:08:01,440 --> 00:08:06,240 Speaker 3: Of those who lost their lives on that day. We 127 00:08:06,400 --> 00:08:11,560 Speaker 3: have been running higher security settings for quite a long 128 00:08:11,600 --> 00:08:14,760 Speaker 3: period of time. Actually, we were running higher security settings 129 00:08:14,840 --> 00:08:21,400 Speaker 3: with more guards and very close collaboration with local and 130 00:08:21,480 --> 00:08:27,200 Speaker 3: national police and agencies, particularly in the Lake of October 131 00:08:27,480 --> 00:08:30,800 Speaker 3: last year and the conflict in the Middle East, and 132 00:08:31,040 --> 00:08:35,440 Speaker 3: we continued to run with those higher security settings. There's 133 00:08:35,480 --> 00:08:40,480 Speaker 3: more visibility of security presence at our destinations, but more apportantly, 134 00:08:40,520 --> 00:08:44,800 Speaker 3: it's that collaboration with the police, and I'd like to 135 00:08:44,800 --> 00:08:49,560 Speaker 3: take this opportunity of thanking the police, the emergency first responders, 136 00:08:50,280 --> 00:08:55,160 Speaker 3: and our BONDI team for how they reacted to that 137 00:08:55,360 --> 00:08:59,520 Speaker 3: terrible events on April the thirteenth and how we continued 138 00:08:59,559 --> 00:09:04,600 Speaker 3: to act with the victims and the families of the victims. 139 00:09:05,640 --> 00:09:09,280 Speaker 3: But we are very focused on providing a safe environment 140 00:09:09,360 --> 00:09:12,839 Speaker 3: because it's core to our strategy of having people spend 141 00:09:12,840 --> 00:09:14,679 Speaker 3: more time with us at our destinations. 142 00:09:21,800 --> 00:09:24,520 Speaker 1: That was that a group. CEO Elliott Rosenauer speaking to 143 00:09:24,640 --> 00:09:27,880 Speaker 1: Juliet Sally from Osby's sign Up at Osbiz dot Com 144 00:09:27,880 --> 00:09:30,000 Speaker 1: today you It's free. This is a Fear and Greed 145 00:09:30,040 --> 00:09:32,520 Speaker 1: daily interview. Join us every morning for the full episode 146 00:09:32,559 --> 00:09:34,880 Speaker 1: of Fear and Greed daily business news for people who 147 00:09:34,920 --> 00:09:37,880 Speaker 1: make their own decisions. I'm Suan alma Enjoy your day.