SYDNEY--Vicinity Centres forecast another year of higher earnings as redevelopments of flagship malls such as Chatswood Chase in Sydney counter the impact of a slowdown in consumer confidence and rising costs on tenants.

Vicinity said it expects funds from operations per security of between 16.0 Australian cents (11.4 U.S. cents) and 16.2 cents in the 12 months through June, 2027. That represents growth of 5.9% at the midpoint of the range on the just-ended year.

The company also projected adjusted funds from operations per security of between 13.9 cents and 14.1 cents for the same period.

"Our outlook is one of cautious confidence, recognising and responding to both the structural drivers that support our business as well as the need to remain alert to changing market conditions," said Chief Executive Peter Huddle. "We remain mindful of the risks posed by geopolitical uncertainty and potential shifts in household financial conditions."

Vicinity Centres has been overhauling its property portfolio to position itself better for a future when interest rates come down, inflation turns benign, and geopolitical tensions ease.

Key to that strategy has involved creating a new luxury precinct at the Chatswood Chase mall, located within one of the fastest-growing suburbs of Sydney, and selling unwanted assets in towns such as Armidale and Gympie. The luxury precinct at Chatswood Chase opened at the end of April and Vicinity Centres hopes to have the mall fully open within weeks.

The company is also spending some A$120 million on a redevelopment of the Galleria mall in Perth, aiming to have it open in November.

The outlook was given to investors alongside a net profit of A$1.39 billion for fiscal 2026, up 39% from A$1.0 billion achieved a year earlier.

Funds from operations rose by 3.9% to A$700.1 million across fiscal 2026. When measured on a per-security basis, funds from operations were 15.21 cents. Vicinity Centres had previously signaled that annual funds from operations would be around the top end of guidance for 15.0-15.2 cents.

Directors of Vicinity Centres declared a final distribution of 6.20 cents a share, up from a payout of 6.05 cents a year ago. That brought the total payout for the year to 12.4 cents, representing a payout ratio of 95.5% of adjusted funds from operations.

Many of the company's key performance metrics improved, despite a stiffening headwind for consumers during the second half of the year as interest rates rose and cost-of-living pressures intensified. Leasing spreads were positive at 4.2%, occupancy was 99.6%, and gearing was 26.1%. Comparable net property income grew by 4.2%.