Vicinity Centres Accelerates Premium Portfolio Growth with Uptown Acquisition

Strong Financial Performance Amid Strategic Portfolio Shift

Vicinity Centres has delivered a compelling FY26 interim result, with statutory net profit after tax soaring to $805.6 million, a significant increase from $492.6 million in the prior corresponding period. This performance is underpinned by a 3.7% growth in comparable net property income (NPI), which rises to 4.1% when excluding the impact of new taxes and levies. The company’s focus on curating a higher quality, premium retail asset portfolio is clearly paying dividends.

Leasing metrics remain robust, with portfolio occupancy edging up to 99.6%, reflecting strong tenant demand and a disciplined approach to lease negotiations. Leasing spreads improved to 4.6%, supported notably by the Apparel & Footwear category, which achieved a 7.2% increase, driven by flagship assets such as Chadstone and the Outlet Centres.

Uptown Acquisition – A Strategic Move into Brisbane’s CBD

One of the standout developments in this half-year was Vicinity’s irrevocable acceptance of IFM Investors’ offer to acquire the remaining 75% interest in Uptown, Brisbane, for $212 million. This landmark retail asset is strategically positioned atop a major bus interchange and is poised to benefit from a $27 billion government infrastructure investment in Brisbane, including projects like the Brisbane Metro and Cross River Rail.

The acquisition sets the stage for a large-scale retail redevelopment planned from 2027 to 2029, with an expected investment of $300-$350 million. Vicinity envisions repositioning Uptown into a vibrant retail destination blending fashion, dining, technology, leisure, and entertainment, drawing parallels to Emporium Melbourne. The project targets a stabilised yield exceeding 6% and an internal rate of return above 10%, with development-related loss of rent expected to remain within existing guidance.

Development Pipeline and Portfolio Premiumisation

Vicinity’s development pipeline remains active and focused on premium retail assets. The successful opening of Stage 1 of the reimagined Chatswood Chase in northern Sydney has already delivered a 34% uplift in same-store sales and attracted 65 new retailers. Meanwhile, Chadstone’s fully integrated 20,000 square metre office tower now accommodates over 6,500 office workers, enhancing foot traffic and spending.

Other key projects include the ongoing redevelopment of the Galleria in Western Australia, which will introduce a new entertainment and lifestyle precinct by Christmas 2026, and targeted retail expansions such as the flagship UNIQLO store at Emporium Melbourne. Mixed-use developments at Chatswood Chase and Bankstown Central further diversify Vicinity’s growth avenues, aligning with government housing priorities.

Disciplined Capital Management and Upgraded Guidance

Vicinity maintains a strong balance sheet with gearing at 26.3% and a weighted average cost of debt around 5.0%. The company has divested $327 million of non-strategic assets at a premium to book value, funding the Uptown acquisition and ongoing developments without materially impacting funds from operations (FFO).

Looking ahead, Vicinity has upgraded its FY26 guidance, expecting FFO and adjusted FFO (AFFO) to be at the top end of their respective ranges, with a distribution payout ratio within the target 95%-100% of AFFO. Comparable NPI growth guidance has been revised upwards to approximately 3.5%, reflecting the company’s confidence in its portfolio quality and retail sector fundamentals.