Vicinity Centres: Improving Portfolio Mix Strengthens Resilience; Solid Start of the Fiscal Year

Vicinity’s fiscal 2025 first-quarter trading update met our expectations. Despite higher interest rates and sticky inflation affecting customers’ discretionary income, retail sales are broadly flat and tenant demand remains strong. Its portfolio maintained near-full occupancy in the first quarter and Vicinity was able to increase rents by 3% on expiring leases. Tenants’ willingness to pay higher rents is largely underpinned by resilient store sales. Portfolio moving average turnover, a measure of tenants’ total sales revenue, grew slightly year on year. While sales in apparel and footwear, jewelry, and homeware softened as cost-of-living pressure weighed, this was offset by robust consumer demand in food retail, food catering, and leisure.