Vicinity Centres (ASX: VCX) reported a 38.5% increase in statutory net profit to $1.39 billion for the year ended June 2026, as the group’s strategy to focus on premium assets drove higher returns and net tangible assets.
Funds from operations (FFO) rose 3.9% to $700.1 million, translating to 15.21 cents per security and matching the top end of guidance. Adjusted FFO increased 4.7% to $600.2 million, while the annual distribution per security rose 3.3% to 12.40 cents, representing a 95.5% payout ratio of adjusted FFO. Net property income (NPI) grew 2.2% to $938.1 million, with comparable NPI up 4.2%.
The group’s portfolio repositioning has accelerated, with premium assets now accounting for 67% of total value on a proforma basis, up from 51% in June 2022. Vicinity completed acquisitions worth $563 million in FY26, including a 75% stake in Uptown (Brisbane) for $212 million and DFO Eastern Creek for $351 million, both settled in August and June respectively. Total acquisitions since FY24 now total $1.29 billion, including Chatswood Chase ($307 million) and Lakeside Joondalup ($420 million).
Net tangible assets per security increased by 19 cents, or 7.7%, to $2.59, while net portfolio valuation gains totaled $700 million for the full year, with H2 gains of $293 million. Portfolio occupancy reached a historical high of 99.6%, while holdovers declined to 1.5% of income. Leasing spreads improved to 4.2% for the total portfolio, the highest annual result since inception, with premium leasing spreads at 7.7%. Apparel and footwear leasing spreads stood at 6.0%, representing over 30% of total rent transacted.
Retail sales growth for the portfolio rose 3.3% in FY26, with specialty and mini-major sales up 4.0%. Food retail sales grew 5.4%, general retail 6.3%, and jewellery 7.8%, while department stores declined 1.3%. Tenant retention was 74%, with a weighted average lease expiry of 3.7 years by income. Specialty moving annual turnover per square meter increased to $13,512 overall and $17,035 for premium assets.
Capital management metrics improved, with gearing at 26.1% as of June 30, 2026, within the target range of 25% to 35%. The weighted average cost of debt declined to 4.98%, while the interest cover ratio strengthened to 4.1 times. Total debt facilities stood at $5.2 billion, with 89.5% hedged over FY26. Credit ratings remained stable, with S&P Global at A/stable and Moody’s at A2/stable.
For FY27, Vicinity guided FFO per security to 16.0 to 16.2 cents, representing growth of 5.3% to 6.6% from FY26. Adjusted FFO per security is expected to range from 13.9 to 14.1 cents, with a distribution payout ratio of 95% to 100% of adjusted FFO. Comparable NPI growth is forecast at 3.5%, while development-related loss of rent is expected to decline to approximately $18 million from $27 million in FY26.
