Vicinity Centres (ASX:VCX) remains optimistic as NSW & Victoria reopen

Company News

by Lauren Evans

Vicinity Centres (ASX:VCX) reported on a challenging September quarter with no earnings guidance for provided for FY22 following a significant impact in NSW and Victoria during lockdowns.

The real estate investment trust said it has seen positive initial signs on reopening in NSW and Victoria, while states with lower case numbers still performed higher in the September quarter. 

Vicinity noted that Covid-normal states continued to report strong sales growth for the quarter, up 7.1 per cent year-on-year. Meanwhile, total portfolio occupancy remained high at 98.1 per cent.

“Despite the challenging trading conditions, particularly in our two key markets, we remained disciplined and focused on managing Vicinity for the long-term,“ said CEO Grant Kelley.

“The first quarter of FY22 has been a challenging one as prolonged lockdowns in NSW and VIC impacted the performance of our portfolio. However, retail sales across the COVID-normal states remained strong and we are delighted with the rebound in visitation in NSW and VIC, as restrictions started to ease in October.”

Total portfolio visitation was 55 per cent of pre-covid levels a year ago, adversely impacted by the NSW and VIC lockdowns, where centre visitation averaged around 19 per cent and 50 per cent of pre-covid levels. However, excluding NSW and Victoria, portfolio visitation was robust, averaging 90 per cent of pre-covid levels.

Due to the prolonged lockdown in the two major states, total portfolio retail sales for the quarter was down 25.7 per cent year-on-year but up 7.1 per cent across the covid-normal states.

“We understand that retailers face a number of challenges in the lead-up to Christmas including staff shortages, excess and changing seasonal stock levels in NSW and VIC, and higher costs and delays associated with freight distribution. Despite these challenges, we are generally seeing elevated leasing deal activity and improving leasing spreads with high occupancy maintained across our portfolio.”

“We are optimistic that positive momentum will continue in 2QFY22 in the lead up to the holiday period and with the resumption of interstate and international travel, but we nevertheless maintain a level of caution with the expected expiry of the respective SME codes of conduct, currently in effect in NSW and VIC, in January 2022.”

Vicinity continues to withhold earnings guidance for FY22 and will closely monitor prevailing conditions. 

Shares in Vicinity Centres (ASX:VCX) are trading 0.9 per cent lower at $1.76.

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