Vicinity Centres has reaffirmed full-year guidance at the top end of its ranges, signalling confidence in trading conditions and the resilience of its retail portfolio through a challenging macro environment. The REIT expects FY26 Funds From Operations (FFO) of around 15.0 to 15.2 cents per security and Adjusted FFO of 12.8 to 13.0 cents, maintaining visibility on earnings despite persistent economic headwinds and retail sector pressures.
The capital management strategy outlined in the quarter reflects disciplined execution. Vicinity raised $654 million via a $500 million 10-year Australian MTN at a 123 basis point margin and approximately $154 million HKD private placement, extending the weighted average drawn debt maturity to 4.6 years from 3.5 years at the half-year. With 89 percent of drawn debt hedged in FY26 and 85 percent hedged in FY27, the company has substantially mitigated near-term interest rate volatility, providing earnings visibility and preserving distributions for securityholders.
Operational metrics paint a picture of a portfolio operating at high efficiency. Occupancy reached 99.6 percent with leasing spreads of positive 5.1 percent, indicating retailers remain willing to expand and pay higher rents. Specialty sales productivity increased to approximately $13,500 per square meter while total portfolio retail sales grew 3.4 percent in the quarter, supported by mini major tenants delivering 3.7 percent growth. These metrics suggest that, despite retailer cost pressures and an Occupancy Cost Ratio of 14.3 percent, the portfolio commands sufficient appeal and tenant demand to support rental growth.
Two major redevelopment projects demonstrate Vicinity’s capacity to upgrade its asset base. The Chatswood Chase luxury precinct opened on 30 April with strong first-week visitation and positive retailer feedback, with the reimagined centre expected to reach 95 percent occupancy by 30 June 2026. The Galleria redevelopment is tracking to open pre-Christmas with over 75 percent pre-leased, both of which should drive earnings accretion in subsequent periods as construction costs cease and rental income ramps.
Portfolio management remains active. The company completed divestitures of Whitsunday Plaza, Armidale Central and Gympie Central on 27 February, consistent with its strategy to focus on higher-quality assets. Combined with maintaining distributions within its 95 to 100 percent AFFO payout target, Vicinity is balancing growth capital investment with returns to securityholders.
Investors should monitor retailer debt levels and broader consumer spending trends, particularly given the macroeconomic and geopolitical uncertainty the company flagged. The completion and ramp of Chatswood Chase and Galleria will be key catalysts for earnings accretion over the next 12 months. This announcement is price sensitive and has been notified to the ASX as material information.
View the full ASX announcement (PDF)
About Vicinity Centres (ASX: VCX)
Vicinity Centres is an Australian real estate investment trust that owns and manages a portfolio of over 50 shopping centres across Australia, including iconic properties such as Chadstone in Melbourne and the Queen Victoria Building in Sydney. The company generates revenue primarily through retail property rental operations and management fees for assets managed on behalf of strategic partners. It operates as a major consolidated REIT with exposure to both major metropolitan shopping destinations and regional centres.
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