Vicinity Reports $1 Billion NPAT and 14.8 Cents FFO Per Security in FY25
Vicinity Centres reported a robust FY25 with statutory net profit surpassing $1 billion and Funds From Operations reaching the top end of guidance, underpinned by strategic asset acquisitions and strong portfolio performance.
- Statutory NPAT doubles to $1.0046 billion in FY25
- FFO per security at 14.8 cents, top of guidance range
- Acquisition of Lakeside Joondalup and divestment of non-strategic assets
- Strong portfolio metrics, 99.5% occupancy, 3.7% comparable net property income growth
- Major developments at Chadstone and Chatswood Chase progressing on schedule
Strong Financial Performance Anchored by Strategic Execution
Vicinity Centres has delivered a standout FY25, reporting a statutory net profit after tax of $1.0046 billion, nearly doubling the previous year’s result. Funds From Operations (FFO) rose 1.4%, or 3.6% when adjusted for one-off items and development-related rent losses, culminating in an FFO per security of 14.8 cents, the top end of the company’s guidance range. This solid financial footing reflects Vicinity’s disciplined approach to portfolio management and investment strategy.
Portfolio Quality and Leasing Strength Drive Growth
The company’s premium asset portfolio continues to outperform, with occupancy holding firm at 99.5% and comparable net property income (NPI) growing 3.7%. Leasing spreads improved to +2.5%, while specialty and mini-major retail sales rose 4.7% in the second half of FY25, signaling robust retailer demand amid a tightening retail supply environment. Vicinity’s specialty occupancy cost ratio of 14.1% suggests ongoing positive leasing tension and potential for future rent growth.
Strategic Asset Moves and Development Progress
In line with its investment strategy, Vicinity acquired a 50% stake in Lakeside Joondalup for $420 million, a premium asset with strong growth prospects. Concurrently, it divested three non-strategic assets at premiums exceeding 5% above book value, enhancing portfolio quality. Major developments are advancing well – Chadstone’s revitalised fresh food and dining precinct, The Market Pavilion, opened to strong trading and boosted visitation by 36% in the final quarter. The Chatswood Chase redevelopment, set to transform northern Sydney’s fashion landscape, remains on track for a staged opening starting in the second quarter of FY26, with leasing largely complete and a marquee partnership secured with the LVMH Group.
Balance Sheet Discipline Supports Growth Ambitions
Vicinity maintains a conservative capital structure, with gearing at 26.6%, comfortably within its 25-35% target range. This prudent financial management underpins the company’s capacity to fund growth initiatives, including an expected $400-450 million in investment capital expenditure for FY26. The introduction of a Distribution Reinvestment Plan (DRP) has provided additional capital flexibility, with a 9% uptake during the interim distribution period.
Outlook – Navigating Growth Amid Market Dynamics
Looking ahead, Vicinity anticipates FY26 FFO per security between 15.0 and 15.2 cents, with a distribution payout ratio of 95-100% of adjusted FFO. Comparable NPI growth is forecast at around 3%, or 3.5% excluding new taxes and levies. The company plans to continue its focus on delivering strong asset performance while completing key developments and cycling the earnings impact of prior divestments. Mixed-use residential opportunities adjacent to Bankstown Central and Chatswood Chase also present promising avenues for future value creation.
Bottom Line?
Vicinity’s disciplined strategy and robust portfolio position it well to capitalise on evolving retail trends and deliver sustained growth.
Questions in the middle?
- How will the completion of Chatswood Chase’s redevelopment impact Vicinity’s rental income and tenant mix?
- What are the risks and timelines associated with the planned mixed-use residential developments at Bankstown Central and Chatswood Chase?
- How might rising construction costs and new taxes affect Vicinity’s development pipeline and future earnings?
