Apparel and footwear sales within Vicinity Centres’ retail portfolio have increased 18.9% compared to the third quarter of FY22, with the property group citing CBD footfall recovery and ongoing out-performance of its outlet portfolio for the growth.
Customer visitation across Vicinity’s total portfolio grew by 16 million in 3Q FY23, noting the Omicron wave in the prior corresponding period. This represented approximately 88% of 2019 levels.
Excluding CBDs, visitation during the quarter was 93% of 2019 levels.
Vicinity’s CBD assets saw a 52% increase in the number of visits in Q3 FY23 compared with Q3 FY22, buoyed by improved weekday visitation.
Similarly, weekend visitation across Vicinity’s CBD assets was 35% higher in the same period as day-trippers continue to frequent CBD centres and international tourism recovers.
Overall portfolio retail sales in the third quarter of FY23 were up 13% on the prior year, cycling the Omicron wave which peaked in early February 2022.
Vicinity CEO and managing director Peter Huddle said the Australian retail sector is continuing to demonstrate resilience in the face of rising household costs and growing near-term macroeconomic uncertainty.
“Our premium centres delivered 20.3% growth and our core centres remained resilient, with 8.4% growth, indicating the continued strength of both discretionary and non-discretionary demand,” Huddle said.
“It was particularly encouraging to see the positive momentum in CBD visitations during the quarter, which underpinned a 37.2% uplift in CBD sales and, in fact, our CBD portfolio was a key contributor to our overall portfolio sales performance.”
All of Vicinity’s retail segments saw growth, with majors up 8.3%, mini majors up 14.7% and specialties up 17.7%.
Excluding the continued out-performance of luxury, specialties delivered 17.2% growth relative to the prior year, with the majority of retail specialty categories delivering double-digit growth.
During Q3 FY23, Vicinity completed 249 comparable leasing deals, a growth of 51 on Q3 FY22.
Leasing spreads for the nine months ended March 31, 2023 were at +0.3% (H1 FY23: -0.1%).
Collection of gross rental billings in respect to Q3 FY23 was 96%, largely in line with the collection rate reported over H1 FY23.
While rent collection from national and majors tenants remains at pre-pandemic levels, the collection of SME debt is ongoing, particularly from those located in CBD centres.
“While retailer confidence and retail sales growth remained robust during the quarter, our outlook for Q4 FY23 and into FY24 remains cautious due to the ongoing escalation of household living costs and the potential for consumption to soften,” Huddle said.
“That said, the strong operating and financial performance delivered in the financial year to date enabled us to guide to around the top end of our FY23 earnings guidance range.
“With a flexible balance sheet and strong credit metrics, Vicinity remains well positioned to navigate market uncertainty and, at the same time, invest in its growth agenda. Furthermore, in an increasingly capital constrained environment, we are prioritising long term growth and value accretion and judiciously deploying capital accordingly.”