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Vicinity Centres (AU:VCX)
ASX:VCX
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Vicinity Centres
(Sydney:VCX)
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Rating:71Outperform
Price Target:
AU$3.00
▲(22.45% Upside)
Action:UpgradedDate:02/18/26
Overall score reflects solid earnings-call momentum (upgraded guidance, strong occupancy/leasing and liquidity) and supportive valuation (modest P/E and attractive yield), partially offset by mixed financial performance driven by declining revenue and weakening free cash flow trends.
Positive Factors
High occupancy and leasing momentum
Near-perfect occupancy and record leasing spreads indicate durable rental cashflow resilience and strong landlord negotiating power. High tenant retention and multi-year average tenures reduce vacancy risk and support steady income, underpinning distributable earnings over the next 2–6 months and beyond.
Strong balance sheet and liquidity buffer
Moderate gearing, sizable undrawn facilities and investment‑grade ratings provide financial flexibility to fund developments, absorb shocks, and refinance maturities without urgent asset sales. This liquidity and rated profile materially lowers refinancing and execution risk over the medium term.
Value-accretive developments and asset recycling
Targeted redevelopments with mid-single-digit stabilized yields and ~10% unlevered IRRs plus demonstrated early trading uplift signal the ability to create long‑term value. Coupled with disciplined asset recycling, this supports sustainable NAV growth and recurring income expansion over coming years.
Negative Factors
Negative free cash flow growth trend
A declining free cash flow trend constrains capacity to self‑fund development, distributions, and contingencies without leaning on disposals or debt. Over multiple quarters this can pressure financial flexibility, raise refinancing needs, and limit optionality for opportunistic investments.
Elevated construction costs and execution risk
Heightened input costs and capacity constraints increase the risk of scope changes, budget overruns and delayed stabilisation. For multi‑year redevelopments, these factors can materially compress projected IRRs, extend loss‑of‑rent periods and erode the anticipated value uplift.
Tax/levy headwinds and higher security provisions
Structural increases in property‑related taxes and recurring security costs reduce net property income margins and are likely to persist until policy or operational offsets occur. These levies and provisions structurally depress distributable income and raise operating cost baselines.
Vicinity Centres (VCX) vs. iShares MSCI Australia ETF (EWA)
Market Cap
AU$11.27B
Dividend Yield4.72%
Average Volume (3M)7.67M
Price to Earnings (P/E)8.5
Beta (1Y)0.57
Revenue Growth0.29%
EPS Growth83.44%
CountryAU
Employees1,257
SectorReal Estate
Sector Strength53
IndustryREIT - Retail
Share Statistics
EPS (TTM)0.17
Shares Outstanding4,599,700,700
10 Day Avg. Volume6,620,781
30 Day Avg. Volume7,666,209
Financial Highlights & Ratios
PEG Ratio0.13
Price to Book (P/B)1.01
Price to Sales (P/S)8.51
P/FCF Ratio17.46
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
AU$2.58Price Target Upside5.13% Upside
Rating ConsensusHold
Number of Analyst Covering7
EPS Forecast (FY)0.15
Revenue Forecast (FY)AU$974.79M
Vicinity Centres Business Overview & Revenue Model
Company DescriptionVicinity Centres (Vicinity or the Group) is one of Australia's leading retail property groups. With a fully integrated asset management platform, and $24 billion in retail assets under management across 63 shopping centres, it is the second largest listed manager of Australian retail property. Vicinity has a Direct Portfolio with interests in 60 shopping centres (including the DFO Brisbane business) and manages 31 assets on behalf of Strategic Partners, 28 of which are co-owned by the Group. Vicinity is listed on the Australian Securities Exchange (ASX) under the code VCX and has over 28,000 securityholders. Vicinity also has European medium term notes listed on the ASX under the code VCD.
How the Company Makes MoneyVicinity Centres generates revenue primarily through rental income derived from its retail properties, which includes long-term leases with major retailers and specialty stores. This rental income is enhanced by periodic rent reviews and incentives designed to attract and retain tenants. Additionally, the company earns revenue from management fees related to the operational oversight of its properties, as well as from development projects that increase the value and utility of its portfolio. Key partnerships with retailers and brands allow Vicinity to create exclusive retail experiences, driving foot traffic and, in turn, rental revenue. Furthermore, the company may benefit from strategic joint ventures and collaborations that enhance its market reach and operational efficiency.
Vicinity Centres Earnings Call Summary
Earnings Call Date:Feb 18, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Aug 25, 2026
Earnings Call Sentiment Positive
The call presented a predominately positive operational and financial picture: record statutory profit, valuation gains, very high occupancy, record leasing spreads, strong retail sales and productivity, successful divestments at premiums, and an upgraded FY'26 NPI/guidance trajectory. Challenges identified — taxes/levies, elevated construction costs, increased security provisions, modest near-term sales seasonality and some one-off items — are meaningful but presented as manageable and largely accounted for in guidance. The balance sheet is strong, liquidity is ample and management has clear strategies to derisk developments and recycle capital, supporting confidence in execution and future returns.Q2-2026 Updates
Positive Updates
Record Statutory Profit and Valuation Uplift
Net profit after tax of $805.6m for the 6 months (statutory net profit ~$806m), up by more than 60%. Net portfolio valuation growth of $407m (2.6% uplift) in H1 contributed to NTA per security increasing to $2.52, up 4.8% in the half.
Strong FFO and Upgraded Guidance
Funds from operations (FFO) of $351m. FFO per security up 1.3% (4.1% when adjusted for lower loss of rent and one-offs). Company upgraded FY'26 comparable NPI growth guidance to ~3.5% and is guiding FFO per security toward the top end of the ranges ($0.15–$0.152) and AFFO per security toward the top end ($0.128–$0.13).
Outstanding Leasing and Occupancy Metrics
Portfolio occupancy at 99.6% (10 bps improvement vs June 2025); strongest leasing spread since inception at +4.6%. Premium assets delivered leasing spreads of 9.7% and outlets 14%, tenant retention at 76%, average lease tenure on completed deals 4.6 years, and average annual escalators of 4.7%. Specialty occupancy cost ratio remains healthy at 14.1%.
Robust Retail Sales and Specialty Productivity
Total sales up 4.2% in H1. Specialty and mini-majors +5.1%; premium assets +5.3%; core assets +4.9%. Specialty sales productivity >$13,400/sqm; premium assets generate ~ $17,000/sqm (26% above portfolio average). Strong category growth: jewellery +11%, leisure +10.3%, athleisure +10.8%, luxury jewellery +8.1%.
Successful Asset Recycling and Strategic Acquisition
Exchanged contracts on divestments totalling $327m executed at a blended 18.2% premium to June 2025 book values (buyer yield reported as slightly over 6%). Irrevocably accepted acquisition of the residual 75% interest in Uptown for $212m; combined acquisition and announced asset sales are largely neutral to FY'26 FFO and leave pro forma gearing at ~25.8%.
Progress on Major Developments and Strong Early Trading at Chatswood
Chatswood Chase Stage 1 opened Oct 23: 2.4m visitors Oct–Dec, $119m spent in the December quarter and same-store sales growth of 34% for opened space. Stage 2 (luxury precinct) remains on track for FY'26 Q4. Other developments (Chadstone, Galleria Morley, Emporium UNIQLO, Mandurah reconfiguration) delivered meaningful sales and productivity uplifts (e.g., Mandurah ~20% uplift in sales productivity Oct–Dec).
Balance Sheet Strength and Liquidity
Gearing at the lower end of target range at 26.3% (pro forma 25.8% after Uptown and asset sales). Undrawn bank facilities of $1.0bn, modest FY'27 maturities (~$300m), investment grade ratings (S&P A stable; Moody’s A2 stable). Average hedge ratio expected ~89% for FY'26 and 85% for FY'27 and guidance to maintain a ~5% weighted average cost of debt for FY'26.
Portfolio Value Uplift Since Strategic Repositioning
Since late 2022 the portfolio strategy has driven approximately $1.8bn uplift in total asset value (stabilised basis), achieved while reducing the number of assets by 12 and navigating an environment with a ~20 bps cap rate expansion noted in commentary.
Negative Updates
Tax and Levy Headwinds
Burdensome new taxes and levies (including Victorian congestion levies and transfer of fire services levy to property taxes, plus airport land lease-related taxes) negatively impacted like-for-like comparable NPI; management expects these drags to annualize in H2 with a normalization expected in FY'27.
Construction Cost and Execution Risk for Future Developments
Elevated construction costs and constrained contractor capacity—particularly in Queensland—create execution and cost risk for planned developments (Uptown estimated project spend $300–$350m). Management is holding contingency and has signalled further derisking work prior to commencement (target calendar 2027).
Increased Security Provisions and One-off Costs
Additional security-related provisions (referenced in light of high-profile incidents) were implemented and are expected to drag on H2 NPI, contributing to a slightly lower full-year comparable NPI guide (3.5%) despite a stronger H1.
Moderate FFO per Security Growth and Management Fee Decline
FFO per security growth modest at 1.3% on a statutory basis (4.1% adjusted). External management fee income reduced by ~$2.5m due to transition of third-party leasing mandate and divestment of co-owned assets.
Near-term Sales Seasonality and Uncertainty Post Rate Moves
November–December blended sales growth for the period was 4.5% (slightly below prior year's 4.9%), and January/early February trading is described as 'a little choppy' with uncertain near-term impact from recent RBA rate rises and timing shifts of Lunar New Year.
Loss of Rent and Stabilisation Timing on Major Projects
Development-related loss of rent guidance for FY'27 is ~ $15m; Chatswood staging includes a multi-year stabilization path (management cited a glide path to stabilized yield by early FY'28). While Uptown is expected to have lower loss impact due to strong car park income, development phasing will still require time to reach full income potential.
Company Guidance
Vicinity upgraded FY‑26 guidance with comparable NPI growth now expected at 3.5%, FFO per security guided around the top end of $0.150–$0.152 and AFFO per security around the top end of $0.128–$0.130, and a full‑year distribution payout ratio targeted at 95–100% of adjusted FFO; the group reiterated a FY‑26 weighted average cost of debt of 5%, an expected hedge ratio on drawn debt of ~89% for FY‑26 (85% for FY‑27), and maintained investment‑grade ratings (S&P A stable, Moody’s A2 stable); balance‑sheet metrics include gearing at 26.3% (pro‑forma 25.8% after the Uptown acquisition and $327m of sales), $1.0bn undrawn facilities and modest FY‑27 maturities (~$300m), while development guidance highlights Chatswood investment of $625m (stabilized yield >6% and unlevered IRR ~10%), Uptown capex of $300–$350m (commencing CY‑2027) with target stabilized yield on cost >6% and unlevered IRR >10%, and loss‑of‑rent guidance for FY‑27 of ~$15m.Vicinity Centres Financial Statement Overview
Summary
Mixed fundamentals: healthy EBIT/EBITDA margins and a stable capital structure, but recent revenue decline and negative free cash flow growth raise sustainability and flexibility concerns. Debt has risen over time, adding risk despite moderate leverage.Income Statement
Vicinity Centres shows a mixed performance in its income statement. The company has a strong gross profit margin, indicating efficient cost management. However, the net profit margin has been volatile, with a significant drop in the latest year due to a decline in revenue. The EBIT and EBITDA margins are healthy, but the negative revenue growth rate is a concern, suggesting challenges in maintaining sales momentum.65
Positive
Balance Sheet
The balance sheet of Vicinity Centres is relatively stable. The debt-to-equity ratio is moderate, indicating a balanced approach to leveraging. Return on equity has been inconsistent, reflecting fluctuations in profitability. The equity ratio is strong, suggesting a solid capital structure. However, the increase in total debt over the years could pose a risk if not managed carefully.70
Positive
Cash Flow
Cash flow analysis reveals some challenges for Vicinity Centres. The operating cash flow to net income ratio is strong, indicating good cash generation relative to earnings. However, the free cash flow growth rate is negative, which could impact future investments and financial flexibility. The free cash flow to net income ratio is healthy, but the declining trend in free cash flow is a concern.60
Neutral
| Breakdown | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.32B | 1.31B | 1.23B | 1.18B | 1.11B |
| Gross Profit | 945.00M | 916.50M | 880.80M | 851.50M | 758.20M |
| EBITDA | 1.21B | 736.00M | 446.80M | 785.70M | 506.40M |
| Net Income | 1.00B | 547.10M | 271.50M | 1.22B | -256.80M |
Balance Sheet | |||||
| Total Assets | 16.34B | 15.73B | 15.58B | 15.55B | 14.34B |
| Cash, Cash Equivalents and Short-Term Investments | 80.70M | 49.60M | 192.90M | 55.60M | 36.20M |
| Total Debt | 4.85B | 4.62B | 4.46B | 4.14B | 3.63B |
| Total Liabilities | 5.21B | 5.09B | 4.95B | 4.67B | 4.33B |
| Stockholders Equity | 11.13B | 10.64B | 10.64B | 10.89B | 10.01B |
Cash Flow | |||||
| Free Cash Flow | 644.60M | 353.10M | 367.50M | 334.90M | 598.70M |
| Operating Cash Flow | 651.00M | 690.10M | 702.20M | 589.50M | 599.90M |
| Investing Cash Flow | -176.80M | -435.70M | -203.20M | -512.30M | -126.50M |
| Financing Cash Flow | -443.10M | -397.70M | -361.70M | -68.80M | -655.30M |
Vicinity Centres Technical Analysis
Negative
2.45
Price Trends
2.48
Negative
2.47
Negative
2.44
Positive
Market Momentum
>-0.01
Positive
45.81
Neutral
12.38
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:VCX, the sentiment is Negative. The current price of 2.45 is below the 20-day moving average (MA) of 2.47, below the 50-day MA of 2.48, and above the 200-day MA of 2.44, indicating a neutral trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 45.81 is Neutral, neither overbought nor oversold. The STOCH value of 12.38 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AU:VCX.
Vicinity Centres Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | AU$12.41B | 14.02 | 7.99% | 4.29% | 4.75% | 170.39% | |
71 Outperform | AU$11.27B | 8.50 | 9.03% | 4.72% | 0.29% | 83.44% | |
70 Outperform | AU$19.93B | 11.18 | 7.71% | 4.13% | 5.44% | 231.88% | |
69 Neutral | AU$9.69B | 9.88 | 3.56% | 4.41% | 12.66% | ― | |
66 Neutral | AU$8.09B | 20.96 | 0.71% | 4.39% | -18.48% | ― | |
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
56 Neutral | AU$7.22B | 15.15 | 1.32% | 5.32% | 4.52% | ― |
* Real Estate Sector Average
AU:VCX
Vicinity Centres
2.45
0.35
16.89%
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6.71
-0.35
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3.82
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Stockland
5.11
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4.01%
Vicinity Centres Corporate Events
Vicinity Centres Reports Lapse of Performance and Restricted Rights
Jan 4, 2026
Vicinity Centres has notified the ASX that a total of 78,265 equity-based incentives, comprising 40,761 performance rights (VCXAK) and 37,504 restricted rights (VCXAA), have lapsed as of 31 December 2025 because the conditions attached to these rights were not met or became incapable of being satisfied. The cessation of these conditional rights marginally reduces the company’s potential future share issuance under its incentive plans, implying a slightly lower level of prospective equity dilution for existing security holders while signalling that certain performance or service hurdles tied to executive or employee incentives were not achieved.
The most recent analyst rating on (AU:VCX) stock is a Hold with a A$2.60 price target. To see the full list of analyst forecasts on Vicinity Centres stock, see the AU:VCX Stock Forecast page.
Vicinity Centres Releases 2025 Modern Slavery Statement
Dec 17, 2025
Vicinity Centres has released its 2025 Modern Slavery Statement, highlighting its commitment to addressing modern slavery risks within its operations and supply chains. This announcement underscores the company’s dedication to ethical practices and compliance with regulatory standards, potentially strengthening its reputation and trust among stakeholders.
The most recent analyst rating on (AU:VCX) stock is a Sell with a A$2.68 price target. To see the full list of analyst forecasts on Vicinity Centres stock, see the AU:VCX Stock Forecast page.
Vicinity Centres Issues Unquoted Equity Securities for Employee Incentive
Dec 11, 2025
Vicinity Centres has announced the issuance of unquoted equity securities, specifically 2,544,526 performance rights and 555,824 restricted rights, as part of an employee incentive scheme. This move is likely aimed at aligning employee interests with company performance, potentially enhancing operational efficiency and stakeholder value.
The most recent analyst rating on (AU:VCX) stock is a Sell with a A$2.68 price target. To see the full list of analyst forecasts on Vicinity Centres stock, see the AU:VCX Stock Forecast page.
Vicinity Centres Updates Director’s Equity Incentive Plan
Dec 11, 2025
Vicinity Centres announced a change in the interest of its director, Peter Huddle, with the allocation of 913,591 Performance Rights under the FY2026 Equity Incentive Plan. This adjustment, approved by securityholders at the 2025 Annual General Meeting, reflects the company’s ongoing commitment to aligning executive incentives with long-term performance goals, potentially impacting its operational strategies and stakeholder interests.
The most recent analyst rating on (AU:VCX) stock is a Sell with a A$2.68 price target. To see the full list of analyst forecasts on Vicinity Centres stock, see the AU:VCX Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.