Vicinity Centres (ASX: VCX) shares are inching lower this morning following the company's September quarterly update. At the time of writing, the Vicinity share price has fallen 0.72% to $1.37.
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Quarterly update highlights
Vicinity highlighted three core macro trends that were driving its financial and operational performance during the quarter. These included:
- Government-mandated closures for most retail stores across Victoria since 6 August 2020, with extensive re-openings allowed from 28 October 2020.
- CBD centres impacted by many city employees continuing to work from home and by travel restrictions.
- Increased visitation and retail sales in centres outside of Victoria and CBDs compared to the June 2020 quarter.
As a result, the company's moving annual turnover (MAT), the total value of consumer spending on a rolling 12 month period, fell 15.2% in September compared to a 7% fall in June. If its portfolio excluded Victorian and CBD centres, MAT would have only fallen 1.7%.
Centre visitation for the week ended 3 November 2020 as a percentage of the same week in the prior year was sitting at 80% for Vicinity's portfolio. This is an improvement from the September quarter which averaged approximately 58%.
Vicinity's cash collections for the September quarter represented 56% of gross rental billings.
A slower recovery for the Vicinity share price
Scentre Group (ASX: SCG) announced its quarterly update on Thursday which highlighted much stronger metrics across rent collection, consumer spending and centre visitation when compared to Vicinity.
This is primarily driven by the fact that Vicinity's portfolio is much more concentrated in Victoria, where for a 12-week period, 83% of its Victorian tenancies were closed due to government directives. With Victoria coming out of lockdown, Vicinity's quarterly update did highlight a significant improvement in centre visitation for the week ended 3 November.
Mr Grant Kelley, Vicinity Centres CEO and Managing Director, said:
We are confident that visitation across our Melbourne centres will continue to rebound, repeating the trend observed in other markets in Australia where the virus has been largely contained. When combined with borders re-opening and the return of domestic tourism, along with a steady increase in workers returning to CBD offices, this should support improved retail conditions across Australia.
Due to current uncertain circumstances, Vicinity cannot presently provide FY21 earnings guidance. However, assuming no material deterioration in existing conditions, it does intend to pay a dividend for the six months to 31 December 2020.
Foolish takeaway
Vicinity is unfortunately a step behind Scentre Group given its Victoria-weighted portfolio. Following today's weaker quarterly update, the Vicinity share price is currently nearly 45% lower in year-to-date trading.
