Company result

Given how tenant moving annual turnover looked at the last half (first graph)…

…we see the subsequent successful collection of rental billings as a solid accomplishment.

Occupancy remains high, at 98.2%, which we see as essential for keeping the positive network effects of shopping centres (foot traffic, destination based “experiences”) alive.

In a world dominated by COVID effects (numerous rolling lockdowns) leasing spreads are what gives to maintain those high levels of occupancy, and VCX saw meaningful declines (~-12%) accordingly.

Overall, the adjusted funds from operations was reasonably solid, up 7% over FY2020, and modestly ahead of expectations.

VCX generally trades like good quality, and screens as very good value.


Now, whilst VCX’s portfolio assets are indeed very high quality (for example the QVB in NSW, or Chadstone in Victoria) for the most part this positive quality factor loading stems from the very low sector beta of REITs (often ~.7x).

Overall, cap rates remain attractive, with a weighted portfolio average of ~5.4% (graph below not updated to latest numbers).

The point remains, however, that the expectations embedded in the VCX market cap are low, and to our mind, enable good odds of VCX surprising to the upside over time.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

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