This article is from the Australian Property Journal archive
RETAIL landlord Vicinity Centres (ASX:VCX) has updated its earnings guidance for the year ending 30 June 2022, after ongoing strength in retail sales and negotiation outcomes with retailers.
VCX as a result of these sustained and improving results has brought in greater than anticipated cash collections than current and previous years.
Vicinity is expecting FY22 FFO to be at least 12.6 cents per security, with AFFO to be at least 10.3 cents per security, for a full year distribution at the lower end of its 95% to 100% AFFO target range.
Cash collections for the second half of FY22 have seen mild improvements, reaching 91% of gross billings, compared to 89% at 28 April 2022.
“The updated FY22 earnings guidance today demonstrates our continued focus on collecting current and overdue rent,” said Grant Kelley, CEO and managing director of Vicinity Centres.
Vicinity has reported that collecting current and outstanding rent, along with ending COVID-related lease variation negotiations, is a top priority as the year comes to a close.
“Furthermore, while we are mindful of the inflationary and rising interest rate environment, we continue to observe favourable trading conditions that support our recovery from the pandemic as well as our long-term growth agenda,” added Kelley.
The group also announced a $245 million or 1.7% uplift in book values based on preliminary 30 June 2022 asset valuations, for the last six months.
“We are pleased with the increase in preliminary asset valuations, noting especially that income growth across a number of our flagship Premium, Outlet and Sub-regional centres was a dominant driver of the valuations uplift,” said Kelley.
“Our regional and sub regional assets continued to benefit from strong transactional evidence, with pricing of third-party interests in assets where Vicinity is a joint owner delivering meaningful valuation gains.”
This also represents a 5.4 cents per security increase and a tightening weighted average capitalisation rate from 5.35% to 5.31%.
“Outlet valuations continue to grow as income growth and tightening capitalisation rates highlight the ongoing strength of our Outlet portfolio and its resilience through cycles,” added Kelley.
Kelley added that CBD asset valuations have been sustained at 31 December 2021 levels, with weekend visitation at 85% of pre-COVID levels,
“We maintain our view that the outlook for CBD retail is improving, and we expect these centres to return to their former vibrancy over time.”
32 Vicinity assets, or 56% of the portfolio by value, are undertaking independent valuations, with the remaining 27 subject to internal valuations.
