Vicinity Centres reported a strong first half of FY26 with a statutory net profit of $805.6 million, strategic acquisitions including full ownership of Uptown Brisbane, and reaffirmed guidance for the full year.
- Statutory NPAT rises to $805.6 million in 1H FY26
- Funds From Operations per security up 1.3%, adjusted growth 4.1%
- Acquisition of 75% stake in Uptown Brisbane for $212 million
- Divestment of non-strategic assets for $327 million at 18.2% premium
- Development projects on track including Chatswood Chase Stage 2 and Galleria redevelopment
Strong Financial Performance Amid Strategic Portfolio Refinement
Vicinity Centres has delivered a robust set of results for the six months ending December 2025, reporting a statutory net profit after tax of $805.6 million, a significant increase from $492.6 million in the prior corresponding period. Funds From Operations (FFO) per security showed modest growth of 1.3%, rising to 4.1% when adjusted for one-off items and reduced lost rent from developments. This solid financial footing underpins the company’s confidence in its strategic direction and operational execution.
Comparable Net Property Income (NPI) grew by 3.7%, or 4.1% excluding new taxes and levies, reflecting the strength of Vicinity’s retail portfolio. The company declared an interim distribution of 6.20 cents per security, up from 5.95 cents, maintaining a payout ratio of 88.4% of adjusted FFO, signalling ongoing income reliability for investors.
Strategic Asset Moves Bolster Portfolio Quality
Vicinity’s disciplined capital management is evident in its recent transactions. The company irrevocably accepted IFM Investors’ offer to acquire the remaining 75% interest in Uptown Brisbane for $212 million, a landmark retail asset in Brisbane’s CBD with strong growth potential, especially ahead of the 2032 Olympic Games. This acquisition will allow Vicinity to fully leverage its development and leasing expertise to revitalise Uptown and unlock latent value.
Simultaneously, Vicinity divested non-strategic assets and ancillary land for a combined $327 million, achieving an 18.2% premium over book values. These divestments, including Gympie Central, Whitsunday Plaza, and Armidale Central, are part of a broader strategy to recycle capital into premium assets with superior income and growth prospects.
Robust Leasing and Retail Sales Momentum
The retail environment remains favourable, with specialty and mini-major sales up 5.1% in the half, supported by active tenant remixing and enhanced retail offerings. Occupancy rates remain near peak at 99.6%, while leasing spreads improved to +4.6%, and average annual rent escalations held steady at +4.7%. These metrics underscore strong demand for quality retail space amid tightening supply.
Vicinity’s premium assets, including Chadstone and Chatswood Chase, continue to outperform, with leasing spreads of +9.7% and specialty retail sales growth of 5.3%. The successful opening of Chatswood Chase’s Stage 1 and the on-track Stage 2 luxury precinct opening later this year highlight the company’s ability to enhance asset vibrancy and shopper appeal.
Development Pipeline and Mixed-Use Opportunities
Development activity remains a key focus, with the $240 million Galleria redevelopment progressing towards completion by late 2026. The project promises a revitalised mall experience with modern entertainment and dining options. Uptown Brisbane’s redevelopment is planned to introduce a full-price retail, dining, and entertainment precinct, addressing a current gap in Brisbane’s CBD market.
Vicinity is also advancing mixed-use residential developments at Chatswood Chase and Bankstown Central, aligning with government housing priorities and benefiting from accelerated planning pathways. These projects offer significant long-term value creation potential, although the company retains flexibility on timing and scale.
Outlook and Guidance
Looking ahead, Vicinity expects Funds From Operations and Adjusted FFO per security to be at the top end of its FY26 guidance ranges, with distribution payout ratios within target. Comparable NPI growth guidance has been upgraded to around 3.5%, reflecting the company’s confidence in its portfolio’s resilience and growth trajectory. Gearing remains conservatively managed at 26.3%, supporting financial flexibility amid ongoing investment.
Overall, Vicinity Centres continues to execute a clear strategy focused on curating a higher quality, more resilient retail portfolio, supported by favourable sector fundamentals and disciplined capital allocation.
Bottom Line?
Vicinity’s strategic acquisitions and development pipeline position it well for sustained growth, but execution risks and market conditions warrant close attention.
Questions in the middle?
- How will the Uptown Brisbane redevelopment impact Vicinity’s income and valuation over the next few years?
- What are the potential timing and scale risks associated with the mixed-use residential projects at Chatswood Chase and Bankstown Central?
- How might rising interest rates or economic shifts affect Vicinity’s gearing strategy and capital expenditure plans?