Vicinity Centres (ASX:VCX) reported a strong start to FY2026, with management pointing to continued momentum in leasing outcomes, retail sales, and portfolio repositioning during its results call for the six months ended Dec. 31, 2025.
Profit lifted by valuations and operating momentum
CEO and Managing Director Peter Huddle said statutory net profit after tax rose more than 60% to AUD 805.6 million, reflecting growth in funds from operations (FFO) and a “meaningful uplift” in portfolio valuations. CFO Adrian Chye said statutory profit of AUD 806 million comprised AUD 351 million of FFO and AUD 455 million of statutory and other items, with the net property valuation gain the largest contributor.
Chye said the weighted average cap rate tightened 11 basis points to 5.5%. Net tangible assets per security rose to AUD 2.52, up 4.8% over the half.
Portfolio activity: Uptown buyout and divestments at a premium
Huddle said Vicinity has irrevocably accepted IFM’s offer to sell the residual 75% interest in Brisbane’s Uptown for AUD 212 million. He described Uptown as a strategically located CBD asset on Queen Street Mall and positioned it as a beneficiary of state-led infrastructure projects and improved connectivity ahead of the 2032 Olympics.
Vicinity also exchanged contracts to sell several assets—Whitsunday Plaza, Gympie Central, Armidale Central, Victoria Park Central, and ancillary land parcels—for AUD 327 million, executed at a blended 18.2% premium to June 2025 book values. In Q&A, management said the divested assets carried a yield “slightly over 6%.”
Management said the combined effect of the Uptown acquisition and the announced asset sales is largely neutral to FY2026 FFO.
Sales and leasing: occupancy near full and spreads at a record
Vicinity said its centers welcome more than 384 million visitors annually and generate over AUD 18 billion in annual sales. After portfolio sales growth of 3.8% in 2H FY2025, Huddle said total sales grew 4.2% in 1H FY2026, with specialty and mini-major sales up 5.1%. The company reported positive sales growth across every retail category and every state.
Category highlights cited on the call included:
- Jewelry sales up 11%
- Leisure sales up 10.3%, including athleisure up 10.8%
- Luxury posted positive sales growth for four of six months, with luxury jewelry up 8.1%
Huddle said the company increasingly views November and December together due to the growing significance of “Black November.” On a blended basis, November and December delivered 4.5% sales growth in 1H FY2026, compared with 4.9% in the prior year period.
Leasing metrics also strengthened. Portfolio occupancy ended the half at 99.6%, up 10 basis points from June 2025, with tenant retention of 76%. Vicinity achieved a +4.6% leasing spread, which management said was the strongest since the group’s inception in 2015, and maintained average annual escalators on completed deals of 4.7%. The specialty occupancy cost ratio was 14.1%, which management said provided headroom for further rent growth.
Huddle noted premium assets produced higher performance, with comparable NPI growth of 4.6% on a like-for-like basis and premium leasing spreads of 9.7%. Outlets were a standout, with a 14% leasing spread and 99.8% occupancy. He said premium assets are generating around AUD 17,000 per square meter of retail sales, about 26% above the portfolio average.
Development pipeline: Chatswood Chase, Galleria and Uptown
Huddle highlighted the opening of Stage One of the “reimagined” Chatswood Chase on Oct. 23, which introduced 65 new retailers. He said Chatswood Chase recorded 2.4 million visitors between the Stage One opening and December, and shoppers spent AUD 119 million in the December quarter. On a same-store basis, the center delivered 34% sales growth over that period.
Stage Two—described as a luxury precinct anchored by more than 20 luxury brands—remains on track to open from the fourth quarter of FY2026. Management reiterated the project’s investment cost of AUD 625 million, with a targeted stabilized yield of greater than 6% and an unlevered IRR of around 10%. In Q&A, Huddle outlined a glide path toward stabilization, with an anticipated return of roughly 4% by the end of FY2026, 5% the following year, and stabilization in early FY2028, depending on lease-up and any assistance required during ramp-up.
Elsewhere, Huddle said the redevelopment of Galleria in Morley, Western Australia is progressing well, with construction and leasing on track for completion in time for Christmas this year, and in line with previously stated costs and return targets.
For Uptown, Vicinity outlined a vision to create a retail, dining, and entertainment offer “akin to Emporium” in Melbourne’s CBD, complementing the luxury offer at QueensPlaza. The company expects development to commence in calendar year 2027 with total spend of AUD 300 million to AUD 350 million, funded by a mix of asset sales and debt. Management reiterated underwriting targets of a stabilized yield on cost above 6% and an unlevered IRR above 10%. Executives said the redevelopment is intended to be phased, rather than shutting the center down for a full relaunch.
Balance sheet, costs, and updated FY2026 guidance
Chye said gearing remained at 26.3%, at the lower end of Vicinity’s 25% to 35% target range. On a pro forma basis—adjusting for the Uptown buyout and the announced asset sales—gearing was 25.8%. The company maintained investment-grade credit ratings of A (stable) from S&P and A2 (stable) from Moody’s, and reported AUD 1 billion of undrawn bank facilities.
Management fee income declined by AUD 2.5 million year over year due to a third-party leasing mandate transition and divestment of co-owned assets, while net corporate overheads fell 3.3% (AUD 1.4 million). Chye attributed the overhead improvement to cost discipline and capitalized overheads related to elevated development activity, while noting overheads are expected to rise somewhat in the second half.
Huddle said Vicinity lifted its expectation for FY2026 comparable NPI growth to 3.5%, citing stronger-than-anticipated leasing outcomes, improved portfolio metrics, and increased percentage rent. The company guided to around the top end of its FY2026 ranges for:
- FFO per security: AUD 0.15 to AUD 0.152
- AFFO per security: AUD 0.128 to AUD 0.13
Vicinity maintained an expected distribution payout ratio within its target range of 95% to 100% of adjusted FFO.
About Vicinity Centres (ASX:VCX)
Vicinity Centres (Vicinity or the Group) is one of Australia’s leading retail property groups with a fully integrated asset management platform, and $24 billion in retail assets under management across 60 shopping centres, making it the second largest listed manager of Australian retail property. The Group has a Direct Portfolio with interests in 59 shopping centres (including the DFO Brisbane business) and manages 30 assets on behalf of Strategic Partners, 29 of which are co-owned by the Group. Vicinity is listed on the Australian Securities Exchange (ASX) under the code ‘VCX’ and has 24,000 securityholders.
