Almost every shop is let. Scentre Group (ASX:SCG) reported 99.8 per cent occupancy across its Westfield centres at 30 June 2026, and Vicinity Centres (ASX:VCX) reported 99.6 per cent. When vacancy is close to zero, the question for these two S&P/ASX 200 retail landlords is no longer whether tenants will come, but how much rent they can afford to pay and how efficiently that rent turns into distributions.

That is why shopping-centre Economics matter here. Tenant sales, occupancy costs, leasing spreads, funding costs and asset sales now explain more of the difference between the two groups than headline occupancy does.

Two landlords, two reporting calendars

Scentre owns and operates 42 Westfield destinations in Australia and New Zealand, housing about 12,000 outlets. It is a stapled group, meaning units in trusts and shares in a company trade together as one security. It earns mainly rent, plus management fees from co-owned centres.

Vicinity is also stapled and internally managed, with 48 centres in its direct portfolio valued at $16.1 billion, ranging from Chadstone in Melbourne to outlet centres such as DFO. Premium Assets made up 67 per cent of portfolio value, up from 51 per cent in June 2022.

The groups report on different calendars. Scentre's financial year ends on 31 December, so its latest figures are half-year results for the six months to 30 June 2026, released on 25 August 2026. Vicinity's FY26 results, for the year to 30 June 2026, were released on 20 August 2026.

What tenant sales say about rent capacity

A landlord's rent is only sustainable if retailers trade profitably. Scentre's results speaker notes put Business partner sales at $30.3 billion for the 12 months to June 2026, up 4.2 per cent, with specialty store sales up 5.4 per cent. Customer visits reached 347 million in the half, up 3.5 per cent.

Vicinity reported total portfolio retail sales growth of 3.3 per cent, with specialty and mini-major sales up 4.0 per cent. Its specialty occupancy cost ratio, meaning rent and outgoings as a share of a specialty tenant's sales, was 14.4 per cent, which management described as healthy. Scentre did not disclose a comparable ratio in the material reviewed.

Leasing spreads, the change in rent on a new Lease compared with the expiring one, were positive for both: 3.7 per cent across Scentre's 1,401 deals and 4.2 per cent for Vicinity.

Earnings, payouts and the balance sheet

Funds from operations (FFO), the sector's main measure of recurring Earnings before valuation changes, rose 4.4 per cent to A$612 million, or 11.73 cents per security, for Scentre's half. It lifted 2026 guidance to at least 23.79 cents of FFO and 18.473 cents of distributions per security.

Vicinity's FFO was $700.1 million, or 15.21 cents per security, up 4.1 per cent on an adjusted basis that excludes transaction impacts and one-off prior-year items. Distributions totalled 12.4 cents. For FY27 it guided to FFO of 16.0 to 16.2 cents and a payout of 95 to 100 per cent of adjusted FFO (AFFO), which deducts maintenance and leasing capital.

Metric

Scentre

Vicinity

Occupancy (30 June 2026)

99.8%

99.6%

Leasing spread

+3.7%

+4.2%

NTA per security

$3.71

$2.59

Gearing

35.5%

26.1%

Net tangible assets (NTA) is book Equity per security after excluding intangibles. Scentre's NTA of $3.71, gearing of 35.5 per cent and Interest Cover of 3.6 times are as reported by Investing.com from the results slides. Gearing definitions differ, so the gap is indicative rather than exact.

Our comparison: earnings and payouts against book value

By our calculation, Scentre's 2026 FFO guidance of 23.79 cents equals about 6.4 per cent of its $3.71 NTA. Vicinity's FY27 guidance midpoint of 16.1 cents equals about 6.2 per cent of its $2.59 NTA. On this measure, each dollar of book equity is expected to generate similar recurring earnings.

The payout gap is wider. Scentre's 18.473-cent distribution guidance is about 78 per cent of its FFO guidance, while Vicinity's FY26 distribution of 12.4 cents was about 82 per cent of its 15.21 cents of FFO. Periods differ and some inputs are guidance, so these are approximate.

Capital recycling and funding costs

Both groups are selling stakes and reinvesting. Scentre agreed to sell a 50 per cent interest in Westfield Mt Gravatt for $882.5 million, at a 5.50 per cent Capitalisation rate, a 3.5 per cent premium to book value. On 26 August it said buyer Australian Retirement Trust had obtained ACCC clearance, with settlement expected before 30 September 2026.

Refinancing has been a major earnings lever. Scentre refinanced $4.1 billion of higher-cost borrowings and cut its weighted average Credit Margin from 2.6 per cent to 1.6 per cent, contributing to a $58 million fall in interest expense. It had 95 per cent of Debt hedged at an average Base Rate of 3.26 per cent.

Vicinity sold $447.2 million of assets at an 18.4 per cent premium to June 2025 book values, bought DFO Eastern Creek for $351 million on 30 June 2026, and completed the $625 million Chatswood Chase redevelopment. It extended weighted average debt Maturity to 5.1 years.

Where the risks sit

Both depend on household spending, and a slowdown in retail sales would eventually test rent levels even with near-full occupancy. Revaluation gains also flatter statutory results: Scentre's $975 million statutory profit included a $478 million unrealised revaluation increase, and Vicinity's $1,391.2 million statutory net profit also reflected valuation gains.

Scentre carries higher gearing, so changes in debt costs matter more to its earnings, though extensive hedging limits the near-term impact. Development adds execution risk for both. Scentre has 25,600 potential dwellings approved or in advanced planning, and Vicinity plans two residential towers with about 480 apartments beside Chatswood Chase. Vicinity's chief executive, Peter Huddle, described "cautious confidence" for FY27 amid geopolitical uncertainty.

What to watch next

Vicinity's 2026 Annual General Meeting is on 28 October 2026, where Patrick Allaway stands for election as incoming chair. For Scentre, settlement of the Mt Gravatt sale and delivery against its upgraded 2026 guidance are the next markers.

Both remained constituents of the S&P/ASX 200 according to iShares IOZ holdings dated 24 September 2026. Watch specialty sales growth, leasing spreads and occupancy costs: together they indicate whether rent growth is keeping pace with what retailers can afford.