Vicinity Centres has reaffirmed its FY2027 funds from operations (FFO) guidance of 16-16.2 cents per security, up 5.3-6.6 per cent on the previous year. The forecast is underpinned by 99.6 per cent portfolio occupancy, a 5.1 per cent leasing spread and tenant demand.
Speaking at the company’s 2026 annual general meeting, CEO Peter Huddle said leasing spreads were positive across premium and core assets, with demand for space strongest at CBD and outlet centres. More than 90 per cent of the company’s income is secured through leases, while the specialty store occupancy cost ratio is 14.6 per cent. This leaves scope for rental increases, subject to tenant trading performance.
Portfolio retail sales rose 3 per cent during the quarter, compared with 4.4 per cent a year earlier. Specialty stores and mini-majors recorded sales growth of 3.6 per cent, up from 2 per cent and 3.2 per cent in the previous two quarters. Huddle said consumers remained cautious, although jewellery, cosmetics, fashion and footwear continued to perform well.
“Despite near-term pressure on luxury sales from cost-of-living conditions, we are progressing projects at Chadstone that will materially expand the store footprints of several leading global luxury brands,” he said.
Over the past four years, the share of premium assets in Vicinity’s portfolio value has increased from 51 per cent to about 67 per cent. In FY2026, it added DFO Eastern Creek to its outlet portfolio, acquired the remaining interest in Brisbane’s Uptown and continued to reallocate capital from assets with lower earnings prospects.
Vicinity’s $625 million Chatswood Chase redevelopment in Sydney was completed while the centre remained operational. It is expected to generate more than $250 million in development profit without increasing retail gross lettable area.
The $240 million redevelopment of Galleria Morley in Perth is largely complete, with its main opening scheduled for November 5. The first stage includes a refurbished Myer and about 60 retailers. A Hoyts cinema, a refurbished Coles supermarket and an entertainment and dining precinct are expected to open before Christmas.
In Brisbane, Vicinity has lodged a development application for Uptown, aiming to establish the CBD’s only full-line retail destination. The project is expected to benefit from population growth, infrastructure investment and public transport links.
The company has also proposed a residential development next to Chatswood Chase. Its capital structure and timing will be determined after the approval process is complete.
In FY2026, Vicinity recorded FFO of $700.1 million, or 15.21 cents per security, at the top of its guidance range. Comparable net property income rose 4.2 per cent, while distributions totalled 12.40 cents per security. Portfolio revaluation gains of $700 million lifted net tangible assets (NTA) per security by 19 cents, or 7.7 per cent. Gearing remained at the lower end of its target range, and the company retained its investment-grade credit rating.
Chair Trevor Gerber said Vicinity’s balance sheet provided capacity to manage market conditions and pursue investment opportunities. He attributed asset performance and income resilience to capital allocation, portfolio repositioning and operational execution.
For FY2027, Vicinity expects adjusted funds from operations (AFFO) of 13.9-14.1 cents per security. Growth is expected to be supported by stabilised operations at Chadstone, a full-year contribution from Chatswood Chase and Galleria’s November opening. Uptown and DFO Eastern Creek are also expected to contribute.
Management said FY2027 guidance remains subject to unforeseen circumstances and material changes in operating conditions. Risks include cost-of-living pressures, interest rates, technological changes and shifts in consumer behaviour.
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