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Could FY27 Unlock Stronger Growth for ASX Large Cap Vicinity Centres?

Could FY27 Unlock Stronger Growth for ASX Large Cap Vicinity Centres? Source: Kapitales Research
Highlights:
  • Profit climbed sharply, but can portfolio upgrades sustain the momentum?
  • Occupancy reached 99.6% as tightening retail supply strengthened leasing conditions.
  • FY27 guidance signals faster earnings growth as major investments begin contributing.

FY26 Earnings Momentum

Vicinity Centres (ASX: VCX) announced its FY26 results on 20 August 2026, reporting stronger earnings, resilient retail activity and continued portfolio repositioning. Statutory net profit after tax climbed to AU$1.391 billion from AU$1.005 billion in FY25, while funds from operations (FFO) increased to AU$700.1 million from AU$673.8 million. FFO per security reached 15.21 cents, while the full-year distribution increased to 12.40 cents per security.

Retail Portfolio Gains Strength

Vicinity’s operating metrics remained robust despite uneven consumer conditions. Total portfolio retail sales increased 3.3% during FY26, while specialty and mini-major sales advanced 4.0%. Occupancy improved to 99.6%, leasing spreads strengthened to 4.2%, and annual rental escalators remained at 4.8%.

The group’s repositioning strategy is increasingly concentrated on higher-quality properties. Higher-end properties increased their share of Vicinity’s portfolio value to 67%, up from 51% in June 2022. Vicinity acquired DFO Eastern Creek for AU$351 million and the remaining 75% of Brisbane’s Uptown for AU$212 million. Meanwhile, FY26 asset sales totalled AU$327.2 million, with the subsequent AU$120 million Taigum Square divestment lifting announced disposals to AU$447.2 million.

Development Pipeline Adds Upside

Development activity provides another potential earnings catalyst. The AU$625 million Chatswood Chase transformation is complete, while Galleria’s redevelopment is scheduled to open in November 2026. Chatswood Chase is expected to reach a stabilised valuation of approximately AU$1.5 billion, potentially generating development profit exceeding AU$250 million.

Balance-sheet capacity also remains supportive, with headline gearing of 26.1%, near the lower end of Vicinity’s 25%-35% target range.

Can FY27 Deliver More?

Management expects FY27 FFO of 16.0-16.2 cents per security, implying growth of approximately 5.3%-6.6%. AFFO guidance stands at 13.9-14.1 cents, while comparable NPI growth is forecast at 3.5%.

The outlook therefore hinges on translating recent investment into recurring earnings. Full-year contributions from Chatswood Chase, the Galleria reopening and recently acquired assets could strengthen growth, although household finances, geopolitical uncertainty and broader market volatility remain important variables.




Note- All data presented is based on information available at the time of writing.

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