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Why the Vicinity Centres (ASX:VCX) share price is down 38% in 1 year

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There’s no denying 2020 was a tough year for the Vicinity Centres (ASX: VCX) share price. Shares in the Aussie real estate investment trust (REIT) have slumped 38% in the last 12 months to $1.55 per stapled security.

So, what’s driving the REIT’s shares lower?

Why has the Vicinity Centres share price slumped lower?

The coronavirus pandemic had a big impact on retail real estate valuations in 2020. Tightening restrictions across the country reduced foot traffic and in-store sales for major shopping centres.

Vicinity Centres is one of the largest REITs in the country with major assets including Chadstone (Melbourne) and Chatswood Chase (Sydney).

As COVID-19 restrictions kicked in throughout 2020, brick-and-mortar retail fell on hard times. Work from home orders saw vacancy rates soar while a new National Code of Conduct for commercial tenancies impacted on rent collections.

This saw the Vicinity Centres share price crash lower in 2020, starting with the March bear market.

However, it’s not all doom and gloom for the Aussie REIT and its investors. Shares in the retail REIT have climbed 28.1% higher since the end of October to trade at $1.55 per stapled security.

What about the other Aussie REITs?

Shares in Vicinity Centres’ fellow ASX retail REITs have also struggled to make gains over the last year.

The Scentre Group (ASX: SCG) share price is down 29.5% in the last 12 months while SCA Property Group (ASX: SCP) shares are down in the last 11.3% to $2.43 per share.

What’s the outlook for 2021?

No one knows for sure what lies ahead in 2021, particularly given the new strains of COVID-19 and a looming vaccination push.

However, Moody’s Investors Service is anticipating the retail sector will remain “subdued” with downside risks emerging for office REITs.

Industrial assets are tipped by Moody’s to be best placed for growth in 2021 given strong demand for logistics and data centres.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Shopping Centres Australasia Property Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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