We Maintain Vicinity Centres' No-Moat Rating and AUD 2.20 Fair Value Estimate on Coverage Transfer

Vicinity Centres is repositioning to “fortress style” assets – one-stop destination shopping centers that are located in large population catchments. In recent years, the group has been actively developing and acquiring large premium assets, while divesting smaller regional or neighborhood malls. Notable recent acquisitions include a 50% stake in Perth’s Lakeside Joondalup, and the remaining 49% in Sydney’s Chatswood Chase. The most valuable asset Vicinity owns is Chadstone in Melbourne, Australia’s largest and highest turnover shopping center, which accounts for almost a quarter of the total portfolio value. City centers make up around 15%, of which the best known are Sydney’s Queen Victoria Building, The Strand Arcade, and The Galeries. Vicinity also holds several direct factory outlet centers, which specialize in selling excess or previous seasons’ stocks at discounted prices.