Vicinity’s $625m Chatswood Chase Reopening Tests Resilience Amid Economic Uncertainty

Strong FY25 Performance Amid Strategic Portfolio Shift

Vicinity Centres has delivered a standout financial year, reporting a statutory net profit of just over $1 billion for FY25, nearly doubling the previous year’s result. This robust performance reflects the company’s disciplined execution of its strategy to enhance portfolio quality and drive sustainable growth. Central to this success was the acquisition of a 50% interest in Lakeside Joondalup in Western Australia for $420 million, alongside securing full ownership of Chatswood Chase in Sydney, both acquired at prices below replacement cost and now showing promising growth potential.

The company also surpassed its asset divestment targets, raising close to $460 million from the sale of non-strategic assets; almost double the initial $250 million goal. These divestments have been instrumental in funding ongoing developments and acquisitions, while accelerating the shift towards a premium retail portfolio, which now comprises 66% of total assets by value, up from 51% in 2022.

Retail Sales Momentum and Operational Highlights

Retail sales growth momentum from FY25 has carried strongly into the first quarter of FY26, with a 4.4% increase across the portfolio. Specialty and mini-major retailers led the charge with 5.9% sales growth, supported by a high portfolio occupancy rate of 99.5% and positive leasing spreads of +2.9%. These metrics underscore the resilience of Vicinity’s retail assets amid improving consumer confidence, bolstered by recent tax cuts and interest rate reductions.

Key developments at flagship centres have further enhanced Vicinity’s market position. Chadstone’s newly launched Market Pavilion fresh food precinct continues to outperform expectations, with sales productivity exceeding $18,000 per square metre and visitation up 35% year-on-year. The adjacent One Middle Road office tower has attracted prominent tenants such as Adairs and Kmart, bringing an estimated 2,000 office workers to the precinct and supporting weekday retail activity.

Meanwhile, the reimagined Chatswood Chase has successfully reopened its first stage, featuring over 60 retailers including flagship stores for David Jones, Apple, and luxury brands under the Louis Vuitton Moët Hennessy Group. Early feedback from retailers and shoppers has been overwhelmingly positive, with sales surpassing opening targets and reinforcing Chatswood Chase’s status as a premier retail destination.

Outlook and Financial Discipline

Looking ahead, Vicinity has reaffirmed its FY26 earnings guidance, expecting Funds From Operations (FFO) per security to range between 15.0 and 15.2 cents, and Adjusted FFO between 12.8 and 13.0 cents. The company remains committed to strong financial stewardship, maintaining gearing at a conservative 26.6% despite significant capital deployment on acquisitions and developments.

Management acknowledges the ongoing uncertainties in the geopolitical and economic landscape but remains cautiously optimistic given the favourable retail sector fundamentals and demographic tailwinds. The commencement of the Galleria redevelopment in Perth, scheduled for completion by Christmas 2026, marks the next major milestone in Vicinity’s growth agenda.

Overall, Vicinity Centres continues to leverage its integrated asset management platform and strategic portfolio positioning to deliver value for securityholders, while fostering a culture of high performance and inclusion across the organisation.