Vicinity Centres

and welcome to the Centres FY26 annual results briefing. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Peter Hurl, CEO and Managing Director. Please go ahead.

Good morning and thank you for joining us for the vicinity centres results call for the 12 month ended 30th of June 2026. Joining me on today's call is Adrian Chai, our Chief Financial Officer. I will start today's presentation on slide five. FY26 was another year of important progress for Vicinity with discipline investment, capital allocation and operational execution reflected in our financial results, portfolio metrics and strengthened balance sheet. Our strategy remains clear to own and operate premium and differentiated retail portfolio capable of delivering superior income and value growth through cycles. The structural conditions underpinning this strategy remain in place. Retail supply per capita continues to contract, and leading discretionary retailers are prioritising high-quality, productive assets. In this context, we completed the $625 million transformation of Chatswood Chase, with the asset now home to the largest and most compelling luxury offer in New South Wales outside Sydney CBD. We have secured full ownership of Uptown. Having acquired the remaining 75% interest for $212 million, Uptown is a landmark Brisbane CBD asset with significant growth potential. We acquired DFO Eastern Creek, increasing our exposure to Western Sydney's residential growth corridor and strengthening our established outlet operating platform. and we continue to recycle capital into assets with stronger growth prospects and clearer strategic relevance. Having entered into binding agreements for the divestment of Tagon Square for $120 million only late last week, total assets divested in FY26 and FY27 to date comprise $447 million. Adrian and I will cover the details shortly, but in summary, Statutory net profit after tax was $1.39 billion, up by nearly $400 million. Funds from operation increased through $700.1 million and on a per security basis reached $15.21 cents, which was at the top end of our guidance range of $15 to $15.2 cents per security. The Board declared a final distribution of $6.2 cents per security, bringing the FY26 distribution to $12.4 cents per security and representing a payout ratio of 95.5% of adjusted FFO. Supported by occupancy of 99.6%, positive leasing spreads of 4.2% and disciplined property management, comparable NPI grew 4.2%. Our balance sheet strengthened further in FY26 with both headline and pro forma gearing remaining at the lower end of our target range. Meanwhile 2 billion of debt transactions were executed during the year the outcomes of which materially increased our weighted average debt maturity from 3.8 to 5.1 years and preserved our weighted average cost of debt at 5%. Of particular note NTA increased by 19 cents or 7.7% to $2.59 per security and by extension we are pleased to report a total return of 12.8% for the year. Today's result represents the cumulative benefit of a portfolio we have been deliberately reshaping over several years supported by favourable sector fundamentals. We have recycled capital from smaller, lower growth and less strategically aligned assets and redeployed it into premium assets via targeted acquisitions and major developments. premium assets comprise 67% of portfolio value, up from 51% in June 2022. The proof points that underpin our strategy remain. At 5.1% and positive 7.7%, comparable MPI growth and leasing spreads delivered by our premium assets remain well above the relevant portfolio averages. and specialty sales productivity of more than 17,000 per square metre was more than 25% above the portfolio average. The combination of several years of superior portfolio metrics is showcased by the MPI growth of 5.8% per annum delivered by our premium assets since June 2022 on a like-to-like basis. and by extension income has been the major impetus underpinning the 41% uplift in average asset values over the same period. Our strategy is fit for purpose and our conviction remains anchored by the financial outcomes it is delivering. In this context and a market where opportunities to add outlet exposure are limited, The acquisition of DFO Eastern Creek strengthens our outlet portfolio and increases our exposure to Western Sydney's growth corridor. While subject to receiving confirmation for the assignment of the ground lease, we will utilise our nomination provision to on-sell the large format retail component on a pass-through basis for $49 million. And by extension, the acquisition of DFO Eastern Creek settled on June 30, 2026 for $351 million. DFO Eastern Creek combines everyday convenience with Destinational Outlet Retail and with its distinct catchment and customer profile, the acquisition compliments DFO Homebush. Outlet Retail is a format we know well and we have a proven capability of acquiring, repositioning and growing income over time. Since acquiring our 50% interest in DFO University Hill in 2020 and Harbour Town Gold Coast in late 2021, These assets have delivered NPI growth of 10.2% and 6.5% per annum respectively. At ZFO Eastern Creek, we see clear scope to lift performance over time by targeted leasing, improved customer experiences and operational efficiencies. What's more, in the more medium term, there is an additional 8,500 square metres of approved outlet expansion which allows us to contemplate greater growth potential into the future. Turning now to retail sales which remain resilient, over the year more than 380 million customer visits to our assets, underpinned annual portfolio sales of approximately 18.4 billion representing MAT growth of 3.3% at June 2026, which was 50 basis points higher than June 2025. Specially in many major sales increased by 4% with all retail categories finishing the year in growth. While growth rates moderated, sales in the second half of FY26 were above the same period last year despite the vastly different operating environments. While luxury sales moderated as cost of living pressures impacted the aspirational customer, the category continues to enjoy exceptional productivity levels at around $61,000 per square metre. Excluding luxury, specially mini-major sales grew 3.5% in the second half. And finally for the 7th consecutive 6 month period we delivered growth in specialty sales productivity reaching $13,512 per square metre in FY26. Sales productivity is ultimately the output of strategic leasing, curating the right brands, formats and customer offer across each asset and the leasing outcomes this year show the strength of that execution. In this context, occupancy strengthened to 99.6%, representing less than one vacancy per centre on average across our portfolio. Leasing spreads for the year were a positive 4.2%, our strongest annual result to date. Adding to this, average annual escalators were maintained at 4.8% and reflecting retailer demand for space. in an increasingly supply constrained environment, average tenure on new deals completed increased to 4.6 years. At 14.4% our specialty occupancy cost ratio remains healthy and continues to provide capacity for future rental growth where sales and retailer profitability support it. The proportion of income on holdover reduced to a record low of 1.5% or just 92 stores excluding sites strategically held for development. Together these metrics point to a healthier, more productive asset portfolio and to the value created when retailers use Vicinity's portfolio to enter, grow and scale in Australia. That pathway often starts at Chadstone then extends for our premium assets and over time into strong regional centres. This is especially evidenced by the proliferation of the number of mini-major stores both across and within our portfolio in recent years. Since June 2019, average store sizes across the portfolio have increased by 19%. In some cases, high performing specialty retailers expand into larger format stores to maximise sales potential. In other cases, both new to market and established retailers are using mini-major stores to scale into additional assets. Athleisure, beauty and lifestyle brands have led this shift, seeking larger formats to showcase broader ranges and immersive brand experiences. The leasing outcomes are compelling, with mini-major leasing spreads at 6.5% in FY26. This is not a one-year aberration. Leasing spreads for mini-majors have tracked above the portfolio average for the last six consecutive six-month periods. And with mini-major sales growth tracking at 7.5% per annum since June 2019, the current and future upside potential is sustainable. I'll hand the call to Adrian.

Thanks, Peter, and good morning. I'll start on slide 12. Statutory net profit after tax for the year was $1.391 billion, with $700 million derived from FFO and $691 million from statutory, non-cash and other items, largely reflecting net property valuation gains. FFO increased 3.9% to $700 million, and at $15.21 cents, FFO per security was at the top end of our guidance range. Adjusting for one-off items and lower development related loss of rent, FFO per security increased 4.1%. Reported MPI increased by 2.2% with strong comparable MPI growth and development income partly offset by transaction impacts. On a comparable basis, NPI increased by 4.2%, reflecting an improvement in occupancy, positive leasing spreads, and fixed annual escalators of 4.8% for specialty and mini-major tenants. Our ongoing focus on cost management resulted in net corporate overheads increasing by only 1.6%, net interest expense reduced by 3.8%, primarily due to net proceeds from asset sales and the distribution reinvestment plan. This was partly offset by lower capitalised interest. Maintenance capex and leasing incentives at approximately $100 million was consistent with recent years. Turning now to valuations on slide 13. The portfolio delivered a net valuation gain of $293 million or 1.8% for the six months to 30 June 2026, marking the fifth consecutive half of positive valuation growth. Income growth was the key driver, underpinned by enhanced portfolio quality and strong operating metrics. outlets were the strongest contributors to income growth, led by DFO South Wharf and DFO Homebush. Overall, the weighted average capitalisation rate tightened modestly by two basis points, supported by favourable retail sector fundamentals, together with sustained investor appetite for retail assets, providing transaction evidence across the full spectrum of retail asset segments. Positive valuation growth supported an increase in net tangible assets per security, up 2.8% in the second half of FY26 to $2.59. On a full year basis, the net portfolio valuation gains were $700 million, contributing to a 19 cent or 7.7% increase in NTA. Looking ahead, Vicinity's enhanced portfolio quality resilient income growth and supportive sector fundamentals provide a strong platform for continued positive valuation outcomes. Turning now to capital management. Maintaining a conservative and disciplined approach to capital management while preserving the flexibility to invest through the cycle remains central to Vicinity's strategy. We continued to actively manage our capital, deploying approximately $900 million of capital into development projects and strategic acquisitions, and divesting $447 million of assets and raising $192 million via the DRP. At 30 June, our gearing was 26.1%. Adjusting for the settlement of the Uptown Acquisition and Tagum Square sale, pro forma gearing is 26.5% and remains at the lower end of our 25-35% target range, providing ongoing flexibility for future investment opportunities. We also maintained our investment grade credit ratings of A stable from S&P and A2 stable from Moody's. During the year we capitalised on supportive credit market conditions. raising $732 million through 10-year debt capital markets transactions. This included a $500 million 10-year ANTN as well as Hong Kong dollar private placements. Pricing was favourable. An investor appetite for longer tenors supported a meaningful extension in weighted average debt maturity to 5.1 years from 3.8 years at June 2025. We also extended and repriced $1.2 billion of bank facilities, reducing interest cost and further strengthening the debt maturity profile. Our weighted average cost of debt was 4.98% and the average portion of hedged debt over FY26 was around 90% and our forecast for FY27 is 87%. With $800 million of undrawn debt facilities, we retain sufficient liquidity to cover all FY27 funding requirements. The DRP will remain active for the FY26 final distribution, supporting continued capital flexibility. Thank you. I'll now hand back to Peter.