For performers, there's no greater honour than receiving a standing ovation. Yesterday’s AGM of Scentre Group, which owns Westfield shopping centres in Australia and New Zealand, ended in this manner. The recipient was none other than Frank Lowy, taking his final bow as chairman of the company he co-founded more than 50 years ago.
Whilst those around him couldn’t help but praise the departing icon of Australian business, Lowy was as focussed on the job as ever, putting the crowd on notice early by saying that ‘business should always come first’.
That ‘business’ had a slow start to the year with total centre sales increasing only 1.3% in the three months to 31 Mar 2016. We’re not too concerned as fellow shopping centre landlords Vicinity Centres and Stockland also found this period tough. The Easter public holidays kept people out of stores and an unseasonably warm Autumn played havoc with demand for the winter apparel stocked by retailers.
More importantly, Scentre is making good progress with its development pipeline. It has completed its Casey Central development, adding 84 specialty stores along with a Coles and Aldi to the regional Victorian centre. It also expects to complete two more projects shortly, including its $310m renovation of Westfield Warringah Mall that will include a range of top international fashion retailers as well as Australia’s first ‘new look’ Myer department store.
These projects will help cement future growth, reinforcing the company’s reputation for offering premium shopping and entertainment hubs that generate more foot traffic and higher rents per square metre than its competitors.
The Lowy name will not be lost to Scentre, however, as son Stephen Lowy was re-elected to the board.
Before inviting Frank Lowy to conclude the meeting with his farewell speech, new Chairman Brian Schwartz likened his role to following Don Bradman in the batting order. However, like many of the cricketers who followed Bradman, Schwartz is taking over with a strong foundation already in place.
In truth, Frank Lowy has been slowly separating himself from Scentre Group ever since it split from Westfield Corp in 2014. However, with his official resignation, an era is well and truly over. Despite the loss, the company owns some of the country's best retail assets and so its future remains bright. We'd love to own it but unfortunately it’s still too expensive. HOLD.