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Vicinity Makes Billion-Dollar Turnaround As Shoppers Return

Shopping giant Vicinity Centres has posted a first-half FY22 profit of $650.2 million, marking a $1.04 billion turnaround after a $394.1 million loss during the first half of the 2021 financial year.

“Despite significant and often prolonged disruptions, consumer and retailer activity during the year demonstrated underlying resilience. In all states, when Covid-19 restrictions eased, consumers were quick to return to retail malls with confidence and the capacity to spend,” Vicinity Centres chief executive Grant Kelley said.

“We expect the impacts of Covid-19 on our business to continue over the coming months due to the emergence of Omicron in late December.

“In January, Omicron had a material impact on visitation, particularly at our centres located on the east coast of Australia, however we are seeing an upward trend in the first two weeks of February,” Kelley said.

Vicinity reported 7.7 per cent growth in Funds From Operations (which is a measure of earnings) from $267.1 million to $287.7 million, driven by the “disciplined” rise of rent collection.

Interestingly, Kelley notes the company’s CBD portfolio has enjoyed a modest increase in value, “corroborating our view that the outlook for CBD retail is improving and these centres will return to their former vibrancy in time.”

This contributed to a 2.3 per cent rise in asset valuations, with net property valuation gain of $320.1 million.

Centre occupancy was at 98.2 per cent, an impressive figure that echoes Vicinity’s claims that it chose to keep leaseholders rather than push for rent during period of downtime.

Vicinity forecast an FFO-per-share of 11.8-12.6 cents, with adjusted FFO in the range of 9.5-10.3 cents.

Kelley said this forecast “demonstrates our growing optimism in general trading conditions.”

Vicinity shares are currently trading at $1.84, surging by 9.8 per cent today.

 



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