Vicinity Centres' December-half result sharply outpaced consensus' and Morgan Stanley's forecasts and management raises funds-from-operations (FFO) guidance by 17.5%.

The result included a $25m provision write-back, but even after excluding this, the broker observes that the result was still very strong, thanks to strong luxury retail percentage writeback. But the broker warns the June half will not benefit from the writeback.

Net tangible assets and cap rates showed only minimal movement, save for the Chadstone cap rate, which fell 13bps.

The broker admires the result and company's rent-vs-sales mix but retains an Equal-weight rating citing caution towards the company's $3bn development pipeline, spying little room for further writebacks.

Target price is steady at $2.26. Industry view: In-line.

Sector: Real Estate.

Target price is $2.26.Current Price is $2.08. Difference: $0.18 - (brackets indicate current price is over target). If VCX meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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