(Adds CEO quote, dividend, forecast, FFO, background)
Feb 14 (Reuters) - Australian mall owner Vicinity Centres reported a 1 percent fall in half-year underlying profit on Wednesday and lowered its dividend as it buckled under a tough retail environment, stagnant wage growth and soft retail spending.
The company switched its primary earnings metric to funds from operations (FFO), which came in at A$357.7 million for the six months to Dec. 31 compared with A$360.7 million a year ago.
Funds from operations, which strips out one-off movements in property valuations, is the most closely watched by analysts and investors in the sector.
The company declared a distribution of 8.1 Australian cents per share, down from 8.7 cents a year ago.
“Subdued economic growth in Australia, in particular wages growth, has underpinned a challenging retail environment,” Chief Executive and Managing Director Grant Kelley said.
Historically seen as a relatively low-risk sector, commercial property investment has become exposed to a number of recent difficulties, including stagnant wage growth and one of the world’s most unaffordable home markets, which have kept shoppers away from stores and put downward pressure on retail rents.
Australian wages rose by less than expected in the third quarter of 2017, with even a mandated jump in the minimum wage failing to lift pay awards across the economy.
The explosion of online shopping - typified by the arrival of U.S. e-commerce giant Amazon.com Inc in Australia in 2017 - has also heaped pressure on commercial tenants.
Vicinity’s net profit for the period slipped to A$755.9 million from A$908.8 million a year ago, it said in a statement.
It said it still expects underlying earnings for fiscal 2018 to be in the range of 18-18.2 Australian cents per stapled security. (Reporting by Devika Syamnath in Bengaluru; Editing by Chris Reese and Paul Tait)