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Highlights

  • Vicinity Centres expects FY25 FFO and adjusted FFO to hit the top end of guidance.

  • Leasing spreads rise 3.5%, reflecting sustained negotiating strength.

  • Shares climb to AU$2.41, marking the highest level since September 2024.

Vicinity Centres (ASX:VCX) rallied as much as 2.1% to AU$2.410 on Tuesday, reaching its highest trading level since September 20, 2024, following a robust operational update and improved earnings outlook for FY25. The stock has now gained over 12% so far this year.

The property group announced that it expects funds from operations (FFO) per security for FY25 to be at the upper end of its guidance range of 14.5 to 14.8 Australian cents. Adjusted FFO is also projected to come in at the top end of the 12.3 to 12.6 cent range. 

In a positive signal for investors, global investment bank Citi noted that the operational update reflects is fundamentals, particularly highlighting a 3.5% increase in leasing spreads. Leasing spreads — the difference between rents for new leases compared to those expiring — serve as a key indicator of market strength and landlord pricing power. The rise suggests that Vicinity is maintaining favourable lease terms despite broader economic uncertainty.

“Leasing spreads rising by 3.5% points to continued landlord strength and healthy tenant demand,” Citi said in a research note. The brokerage, however, maintained its “neutral” rating on the stock with a price target of AU$2.40, suggesting that much of the positive outlook may already be priced into current levels.

Vicinity’s latest update adds to growing optimism around Australia’s commercial real estate sector, particularly shopping centres and mixed-use developments, where foot traffic and consumer spending are showing signs of recovery after pandemic-induced disruptions. The group’s ability to retain and attract tenants on favourable terms also indicates resilience in the face of inflationary pressures and interest rate volatility.

Investors appear to be responding not just to the improved guidance, but also to a broader narrative of operational strength and long-term strategy execution. With nearly AU$2.4 billion in market cap and a portfolio of high-quality retail assets including premium centres such as Chadstone and Queen Victoria Building, Vicinity remains one of the top real estate investment trusts (REITs) on the ASX.