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Date : 24/08/2022

Vicinity Centres ASX Expects the Rebound of CBD – Here is the Reason Why

Vicinity Centres (ASX: VCX) Expects the Rebound of CBD – Here is the Reason Why

Vicinity Centres ASX is a leading Australian REIT and was formerly known as Federation Centres and Centro Properties Group. Over 60 shopping complexes are managed by the company, including flagship stores in CBDs. COVID-19 was a blow to the company’s finances and stock price, but the tide has turned.

With over 60 shopping centres and $26 billion in retail assets under management, Vicinity Centres (ASX: VCX) is the second largest listed manager of Australian retail property. Every six months, VCX ASX stockholders receive a dividend payment from the REIT, funded by the rent collected from the properties’ tenants.

The company announced its FY22 results and favours the investors. The NPAT of the company saw spectacular growth after the covid-19.


Vicinity Centres ASX Results Highlights for FY22

VCX share price is trading at $1.96 and have gained more than 23% in the previous year. The current market cap of the company is around 8.9 Billion AUD.

vicinity centres asx growth analysis forecast

  1. VCX ASX announced a statutory NPAT of $1,215m, an increase of $1,473m YoY.
  2. Funds from operations (FFO) amount to $598 million, or 13.1 cents per share.
  3. After adjustments, the company recorded an AFFO of $496.7m (10.9cps).
  4. The company reported an increase in NTA of 10.3%, to $2.36 per ASX Vicinity share.
  5. The company’s net property valuation increased by $554 million during fiscal year 22.
  6. In FY22, the occupancy rate of the company was 98.3 %.
  7. With this payout, the payout ratio for the year is 95.3% of AFFO, or about 5.7cps, bringing the total distribution to 10.4cps.


Important Events in FY22

Within the past fiscal year, Vicinity Centres’ most notable development was its acquisition of a 50% share in Harbour Town Premium Outlets on the Gold Coast. Vicinity share price fell 0.3% after the announcement of the $358 million acquisition.

Vicinity issued $300 million in six-year notes in June as its first-ever green bond. Vicinity Centres ASX investors were so eager to get their hands on this offering that it was oversubscribed and priced attractively despite the turbulence in the debt markets.


VCX: What if CBDs don’t bounce back?

The leadership of Vicinity Centres assured investors on the conference call that the company will do everything in its power to make its properties the best in their respective CBDs.

As a result, it may still gain as merchants look to consolidate even if CBDs don’t fully rebound for some years. It was also noted that because it owned most of its land, it possessed substantial flexibility and would not be reluctant to engage in acquisitions that would swiftly add to its earnings.


VCX: CEO’s Remarks

When asked about the company’s financial achievements, Vicinity CEO and Managing Director Grant Kelley said, “Our results demonstrate solid operational and financial execution in a recovering retail sector.”

Positive retail sales trends are being observed in our centres despite our awareness of inflation, rising interest rates, and increased building expenses.

Vicinity is prepared well for a rising interest rate environment with our sustained caution regarding fixed loan expenses. At the end of FY2022, Vicinity had nearly 85% of its borrowed debt hedged; in FY2023, that number drops to approximately 80%; in FY2024, there is just a tiny reduction.


VCX ASX: FY23 Guidance

For FY23, Vicinity Centres ASX anticipates FFO per share in the range of 13.1–13.6 cents, AFFO per security in the range of 10.9–11.5 cents, and full-year distribution within Vicinity’s goal range of 95%–100% of AFFO.

The $2.9 billion development pipeline the corporation has planned is now being implemented. Projects with a completion date between FY2023 and FY2027 are included in that total.

Vicinity plans to expand its development capital expenditure to between $200 and $250 million during the current fiscal year. For the Medium-term, the company anticipates spending between $300 and $400 million annually.



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