The Vicinity Centres (ASX: VCX) share price has remained resilient after releasing its results for the first half of FY21. At the time of writing, the Vicinity share price has retreated slightly to $1.60, down 0.2%. How has Vicinity Centres performed? Shares in the Aussie retail investment trust (REIT) have remained fairly stable this morning
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The Vicinity Centres (ASX: VCX) share price has remained resilient after releasing its results for the first half of FY21. At the time of writing, the Vicinity share price has retreated slightly to $1.60, down 0.2%.
How has Vicinity Centres performed?
Shares in the Aussie retail investment trust (REIT) have remained fairly stable this morning after releasing a disappointing half-year report.
For the first half of FY21, Vicinity Centres reported a loss of $394.1 million. The REIT cited that reduced funds from operations and substantial property revaluation costs contributed to the loss.
Consequently, Vicinity reported funds from operations had declined to $267.1 million, from $337 million in the prior corresponding period. The company attributed this to rental waivers and provisions for unpaid rent during the COVID-19 pandemic.
Additionally, Vicinity Centres also reported a net property valuation loss of $572.4 million for the first half.
Despite the disappointing financial results, Vicinity declared a dividend distribution of 3.4 cents per share for the first half, down from 7.7 cents in the prior corresponding period. The distribution equates to $154.8 million for the first half, reflecting a payout ratio of 62.4%.
Vicinity noted that the conservative dividend distribution was due to the uncertainty around full-year earnings and the COVID-19 pandemic.
The outlook for Vicinity Centres remains uncertain
In the half-year report, Vicinity’s management highlighted the tough trading conditions imposed by the pandemic.
Vicinity Chief Executive and Managing Director, Grant Kelley, noted that:
While the retail industry is showing continuing signs of recovery, we recognise that uncertainty remains, with the potential for further COVID-19 restrictions, the unwinding of temporary government support measures, and a prolonged recovery in CBDs on the eastern seaboard.
Despite the challenging conditions, Vicinity’s management remains optimistic about the company’s outlook. According to Mr. Kelley:
Vicinity is well-positioned to benefit from improving economic conditions, with consumer and business confidence now approximating pre-pandemic levels, fuelled by fiscal stimulus measures and record low interest rates.
However, Vicinity noted that in the interim there remains uncertainty given the fluid nature of the pandemic. As a result, Vicinity did not provide full-year earnings guidance.
Notably, the company is targeting a distribution payout ratio of 95 % to 100% of Adjusted Funds From Operations (AFFO) for the full year.
What does this mean for the Vicinity Share Price?
Vicinity Centres is one of the largest REITs in the country. Its major assets including Chadstone (Melbourne) and Chatswood Chase (Sydney).
The impact of the COVID 19 pandemic was reflected in the Vicinity share price, which has plummeted more than 35% in the past year.
At the time of writing, investors remain undecided on the company’s half-year report. Consequently, Vicinity share price trading relatively flat for the day.
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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.