Vicinity Centres Reaffirms FY26 Guidance with Strong Retail Sales and Capital Raise

Capital Management Strengthens Debt Profile

Vicinity Centres (ASX:VCX) has extended its weighted average drawn debt maturity to 4.6 years from 3.5 years six months prior, following a disciplined capital raise of $654 million. The company issued a $500 million 10-year Australian medium-term note (AMTN) at a margin of 123 basis points over swap, complemented by a ~A$154 million 10.3-year Hong Kong dollar private placement at a comparable margin. This strategic move not only lengthens debt maturity but also mitigates near-term interest rate volatility, with 89% of drawn debt hedged in FY26 and 85% hedged in FY27. Vicinity’s conservative balance sheet approach is further supported by strong investment-grade credit ratings and undrawn facilities that provide liquidity for development and market fluctuations.

Retail Portfolio Performance Remains Resilient

Occupancy held firm at 99.6%, with leasing spreads improving to +5.1%, underscoring sustained retailer confidence despite rising costs and macroeconomic uncertainty. Retail sales across the portfolio increased by 3.4% in 3Q FY26, buoyed by mini majors growing 3.7% and specialty sales productivity rising to approximately $13,500 per square metre. Notably, occupancy cost ratio remains sustainable at 14.3%, and retailer debt levels are low relative to billings as of December 2025. This steady performance reflects a higher-quality retail asset mix and favourable industry fundamentals, even as luxury retail sales showed some moderation in March.

Chadstone, a key asset in Vicinity’s portfolio, contributed to this momentum with total centre sales up 4.2%, excluding luxury segments. The company’s retail sales growth aligns with the broader trend of specialty and mini major categories performing strongly, as seen in CBD locations where specialty and mini major sales rose 5.9%, including a 9.5% jump at Emporium following Uniqlo’s expansion. This performance builds on the earlier half-year results where occupancy and leasing spreads also improved, reflecting a consistent upward trajectory in portfolio quality and retailer engagement boosting profits and advancing key retail developments.

Chatswood Chase Luxury Precinct Launches

The opening of Chatswood Chase’s reimagined luxury precinct on 30 April has been met with strong visitation and positive retailer feedback. The precinct currently hosts 13 luxury retailers including Louis Vuitton, Dior, Loewe, and Bvlgari, alongside premium hospitality venues such as Manon Tearoom and Joie. Vicinity expects the precinct to be approximately 95% open by shop count by 30 June 2026, with marquee brands like Hermes, Rolex, Cartier, and Tiffany & Co scheduled to open progressively through to July. The precinct also marks the Australian retail debut of international athleisure brand Alo Yoga, which will open in May 2026. This luxury precinct complements the earlier successful launch of the lower ground fresh food and dining precinct in November 2024 and the elevated fashion mix introduced from October 2025, collectively driving over 5.3 million visitors and $230 million in sales in the six months to March 2026.

Galleria Redevelopment Progresses on Schedule

Vicinity’s Galleria redevelopment remains on track for a pre-Christmas 2026 opening, with construction progressing well and leasing exceeding 75% by shop count. The project maintains its previously stated costs and development return targets, aiming for a stabilised yield of 6% and an internal rate of return above 10%. A key leasing highlight includes the secured extension of Myer’s lease and the introduction of a new Hoyts cinema, enhancing the asset’s appeal. This redevelopment is expected to contribute significantly to Vicinity’s portfolio performance in the coming years.

Guidance and Distribution Outlook

Vicinity reaffirmed its full-year FY26 Funds From Operations (FFO) per security guidance at the top end of the 15.0 to 15.2 cents range, with Adjusted FFO (AFFO) per security expected between 12.8 and 13.0 cents. The company continues to target a distribution payout ratio of 95-100% of AFFO, maintaining a balance between rewarding securityholders and preserving capital for growth. This guidance aligns with the company’s strong operational metrics and capital management initiatives, supporting a stable outlook despite ongoing macroeconomic and geopolitical uncertainties.

Investors familiar with Vicinity’s dividend history will note this update follows recent announcements confirming dividend and DRP details, including the introduction of a New Zealand dollar payment option, which reflects the company’s ongoing commitment to investor-friendly policies ordinary dividend for the half-year ending December 2025.