Vicinity Centres delivered results that met market expectations, with funds from operations reaching $700.1 million in FY26 and per security FFO of 15.21 cents, positioning the company at the top end of its guidance range. The adjusted 4.1 percent growth in FFO per security reflected underlying income gains across the portfolio despite a mixed operating environment through the period. The company paid 12.4 cents per security for the full year, with the final distribution of 6.20 cents, maintaining a 95.5 percent payout ratio of adjusted FFO.
Management’s capital discipline underpinned the portfolio upgrade strategy, with $327 million in non-strategic assets divested during the period and an additional $120 million from the Taigum Square sale completed post-balance date. Concurrently, the company acquired the remaining 75 percent stake in Uptown and newly completed DFO Eastern Creek, repositioning the portfolio toward higher-yielding assets. This selective capital recycling enhanced both portfolio quality and income potential. Comparable net property income growth reached 4.2 percent, demonstrating that the shifts in portfolio composition are translating into economic benefit beyond simple revaluation gains.
The portfolio metrics paint a resilient picture. Occupancy remained at 99.6 percent while leasing spreads of 4.2 percent and annual escalators of 4.8 percent signal a tightening supply environment in retail floorspace. Total retail sales across the portfolio grew 3.3 percent, with specialty and mini majors outperforming at 4.0 percent across all categories. These indicators suggest sector fundamentals are supportive of both tenant economics and the company’s pricing power.
The company has reached completion on flagship developments with Chatswood Chase now open, anchoring the largest luxury retail offering in New South Wales outside Sydney’s CBD. The Chadstone luxury expansion and MECCA flagship are under construction, while the Galleria transformation is set to open in November. The results signal this year marks an inflection point for earnings, with FY27 FFO guidance of 16.0 to 16.2 cents and AFFO of 13.9 to 14.1 cents pointing to material acceleration as prior investments reach maturity.
The balance sheet supports this growth trajectory, with gearing at 26.1 percent comfortably within the target range. Net tangible assets increased 7.7 percent to $2.59 per security, up 19 cents, with the gain reflecting both income accretion and investor demand for retail assets. Investor focus should rest on execution of the development pipeline and whether earnings expansion meets the forecast guidance range. This announcement is price sensitive and has been flagged as material by the ASX.
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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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