Vicinity Centres (ASX: VCX) share price remains resilient

The Vicinity Centres (ASX: VCX) share price has remained resilient after releasing its results for the first half of FY21. …

| More on:
asx shares for housing boom represented by row of miniature white paper houses with one red house

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Vicinity Centres (ASX: VCX) share price has remained resilient after releasing its results for the first half of FY21. At the time of writing, the Vicinity share price has retreated slightly to $1.60, down 0.2%. 

How has Vicinity Centres performed?

Shares in the Aussie retail investment trust (REIT) have remained fairly stable this morning after releasing a disappointing half-year report.

For the first half of FY21, Vicinity Centres reported a loss of $394.1 million. The REIT cited that reduced funds from operations and substantial property revaluation costs contributed to the loss.

Consequently, Vicinity reported funds from operations had declined to $267.1 million, from $337 million in the prior corresponding period. The company attributed this to rental waivers and provisions for unpaid rent during the COVID-19 pandemic.

Additionally, Vicinity Centres also reported a net property valuation loss of $572.4 million for the first half.

Despite the disappointing financial results, Vicinity declared a dividend distribution of 3.4 cents per share for the first half, down from 7.7 cents in the prior corresponding period. The distribution equates to $154.8 million for the first half, reflecting a payout ratio of 62.4%.

Vicinity noted that the conservative dividend distribution was due to the uncertainty around full-year earnings and the COVID-19 pandemic.

The outlook for Vicinity Centres remains uncertain

In the half-year report, Vicinity's management highlighted the tough trading conditions imposed by the pandemic.

Vicinity Chief Executive and Managing Director, Grant Kelley, noted that:

While the retail industry is showing continuing signs of recovery, we recognise that uncertainty remains, with the potential for further COVID-19 restrictions, the unwinding of temporary government support measures, and a prolonged recovery in CBDs on the eastern seaboard.

Despite the challenging conditions, Vicinity's management remains optimistic about the company's outlook. According to Mr. Kelley:

Vicinity is well-positioned to benefit from improving economic conditions, with consumer and business confidence now approximating pre-pandemic levels, fuelled by fiscal stimulus measures and record low interest rates.

However, Vicinity noted that in the interim there remains uncertainty given the fluid nature of the pandemic. As a result, Vicinity did not provide full-year earnings guidance. 

Notably, the company is targeting a distribution payout ratio of 95 % to 100% of Adjusted Funds From Operations (AFFO) for the full year.

What does this mean for the Vicinity Share Price?

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

The impact of the COVID 19 pandemic was reflected in the Vicinity share price, which has plummeted more than 35% in the past year.  

At the time of writing, investors remain undecided on the company's half-year report. Consequently, Vicinity share price trading relatively flat for the day.

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX 200 managed a gain today, but only just.

Read more »

a female steel worker wearing a high visibility vest with her protective helmet tucked under her arm smiles as she carries a clipboard in a large warehouse of steel products.
Earnings Results

Looking at BlueScope shares? Here's your half-year results preview

What is the market expecting for the first half?

Read more »

Teen standing in a city street smiling and throwing sparkling gold glitter into the air.
52-Week Highs

11 ASX 200 stocks streaking to multi-year highs today

The benchmark ASX 200 is in the green and these 11 stocks are setting new price records.

Read more »

Miner looking at a tablet.
Resources Shares

Why is the South32 share price taking such a shellacking today?

A whale move might be behind today's big slump.

Read more »

A woman with strawberry blonde hair has a huge smile on her face and fist pumps the air having seen good news on her phone.
Share Gainers

Why Evolution Mining, Macquarie, Ramsay, and SGH shares are pushing higher today

These shares are having a good session on Tuesday. Let's see what is getting investors excited.

Read more »

A young boy wearing a hat, sunnies and striped singlet looks fierce and flexes his arm in victory.
Broker Notes

Experts reveal 4 ASX small-cap shares to buy now

ASX small-cap shares are slightly outperforming the broader market in 2025.

Read more »

a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.
Share Fallers

Why Breville, Domino's, Liontown, and WiseTech shares are falling today

These shares are out of form on Tuesday. What's going on?

Read more »

Person handing out $50 notes, symbolising ex-dividend date.
Share Market News

3 fantastic ASX ETFs to buy with $5,000 this week

These funds could be great options for investors with money to put into the market this week.

Read more »