Region Group Posts $212.5M Profit, Boosts FY26 FFO Guidance Amid Portfolio Growth
Region Group has reported a strong FY25 with a $212.5 million net profit and raised its FY26 earnings guidance, underpinned by portfolio expansion and increased funds under management.
- Statutory net profit after tax of $212.5 million driven by property value gains
- FFO of 15.5 cents and AFFO of 13.7 cents per security with distributions matching AFFO
- Assets under management rose 8.7% to $5.2 billion with gearing at 32.5%
- Portfolio occupancy steady at 97.5%, specialty rents up 5% annually since FY22
- Funds under management more than doubled to $711.5 million following new Metro Fund
Robust Financial Performance
Region Group (ASX – RGN) has delivered a solid financial performance for the fiscal year ending 2025, reporting a statutory net profit after tax of $212.5 million. This result was largely driven by an increase in the fair value of its investment properties, reflecting the strength of its retail property portfolio amid a competitive market.
Funds from operations (FFO) stood at 15.5 cents per security, while adjusted FFO (AFFO) was 13.7 cents per security. The company maintained a disciplined distribution policy, paying out 13.7 cents per security, which represents 88% of FFO and 100% of AFFO, underscoring its commitment to delivering steady income to security holders.
Operational Highlights and Portfolio Management
Operationally, Region Group’s portfolio occupancy remained strong at 97.5%, with specialty vacancy at a manageable 5.4%. The company reported a 3.1% comparable portfolio sales growth, buoyed by a 3.3% increase in supermarket sales and a 3.7% rise in non-discretionary specialty sales. Average specialty rents increased to $919 per square metre, marking a 5% annual growth since FY22, supported by successful leasing activity and tenant retention rates of 81%.
Region Group continued to curate its portfolio actively, acquiring Kallo Town Centre for $64.5 million and divesting six non-core neighbourhood centres plus one Bunnings asset for $227.5 million. The Delacombe Town Centre Stage 2 development reached practical completion in March 2025, reflecting ongoing investment in asset repositioning and sustainability initiatives, with $75 million spent across developments and upgrades.
Growth in Funds Under Management and Capital Position
Funds under management more than doubled to $711.5 million, boosted by the launch of a new Metro Fund in partnership with a global institutional investor in November 2024. The Metro Fund further expanded with the recent acquisition of Dalyellup Shopping Centre for $35.8 million in July 2025, positioning Region Group for future growth in funds management revenue.
On the capital front, the company maintained a conservative gearing ratio of 32.5%, comfortably within its target range of 30-40%. With a weighted average cost of debt at 4.3% per annum and 97% of debt hedged or fixed, Region Group is well insulated from interest rate volatility. Notably, there are no debt maturities until FY27, and liquidity remains strong with $313.3 million available.
Outlook and Guidance
Looking ahead, Region Group reaffirmed its focus on delivering resilient cash flows and secure distributions. The company provided FY26 earnings guidance of at least 15.9 cents FFO and 14.0 cents AFFO per security, with distribution payout ratios expected to be approximately 90% of FFO and 100% of AFFO. This outlook assumes stable market conditions and highlights ongoing priorities including portfolio curation, leasing strength, expense management, and capital recycling.
Bottom Line?
Region Group’s FY25 results and confident FY26 guidance signal steady growth, but market conditions will be key to sustaining momentum.
Questions in the middle?
- How will rising interest rates beyond current hedges impact Region Group’s cost of debt?
- What are the risks and opportunities in expanding funds under management amid market volatility?
- How might specialty retail trends affect occupancy and rental growth in the coming years?
