Scentre Group (ASX:SCG) is deemed well-positioned for a high-inflation environment, supported by a lease structure where about 80% of specialty leases are linked to the consumer price index, Jefferies said in a Wednesday note.
The company recently reported that its total business partner sales across its portfolio for the three months ended March 31 were up 5% compared with a year earlier, reaching AU$7 billion, driven by 5.3% growth in specialty sales.
Portfolio occupancy stood at 99.8% as of March 31, up 20 basis points from the same period a year earlier.
The company reaffirmed its fiscal-year target for funds from operations of at least AU$0.2373 per security, based on its operating performance in the first quarter, representing at least 4% growth, which Jefferies said is "commendable" considering the number of earnings headwinds this year.
Headwinds include the dilution from partial stake sell-downs of Chermside and Sydney malls in fiscal 2025, the AU$240 million Westfield Bondi redevelopment, as well as lower project income expected from this year with 100%-owned Bondi, the financial services firm said.
Jefferies upgraded its rating on Scentre Group to buy from hold and maintained its AU$4 price target.
Scentre Group shares rose 1% in midday trade on Thursday.