Region Group’s FFO Edges Up to 15.5 Cents as Assets Hit $5.2 Billion
Region Group delivered solid financial results for FY25 with modest growth in funds from operations and assets under management, while announcing a planned CEO retirement and maintaining positive guidance for FY26.
- FFO increased slightly to 15.5 cents per security
- Assets under management grew to $5.2 billion
- Distributions fully paid at 13.7 cents per security
- CEO Anthony Mellowes to retire, successor appointed
- FY26 guidance maintained with expected growth
Solid Financial Performance in FY25
Region Group (ASX – RGN) reported a steady financial performance for the year ended 30 June 2025, with Funds from Operations (FFO) increasing marginally to 15.5 cents per security from 15.4 cents in the prior year. Adjusted Funds from Operations (AFFO) also rose slightly to 13.7 cents per security, matching the distribution payout, which totalled $159.1 million. The company’s statutory profit surged to $212.5 million, buoyed by positive revaluations of its investment properties.
Assets under management (AUM) grew by 8.7% to $5.2 billion, reflecting both acquisitions and strong portfolio valuations. Region’s portfolio benefited from a 3.2% increase in comparable net operating income (NOI), driven by robust leasing activity, rent reviews, and expense management. Net tangible assets per security rose to $2.47, up from $2.42 the previous year.
Strategic Focus on Defensive Retail Assets
Region Group continues to focus on convenience-based retail centres anchored by major supermarkets such as Woolworths, Coles, and Aldi. This strategy underpins the company’s defensive and resilient cash flows, with nearly half of income derived from long-term leases with anchor tenants. The portfolio’s high occupancy rate of 97.5% and strong tenant retention of 81% further support income stability.
Leasing performance remained strong, with 372 deals completed at an average uplift of 3.7%, and specialty rents increasing to $919 per square metre. The company also reported positive sales growth across supermarkets and non-discretionary specialty tenants, reinforcing the resilience of its retail mix amid broader economic uncertainties.
Governance and Leadership Transition
In a significant governance update, CEO Anthony Mellowes announced his intention to retire, with a planned transition to Greg Chubb, an experienced retail property executive, effective March 2026. Mellowes leaves behind a legacy of growth, having overseen the expansion of Region Group’s portfolio from 69 properties valued at $1.4 billion to over 100 properties exceeding $5 billion in value.
Additionally, long-serving director Belinda Robson will retire after 13 years on the board, with Rhonda Jane Lloyd nominated as her successor. Lloyd brings over 30 years of property market experience, signaling continuity in strategic oversight.
Positive Outlook for FY26
Region Group reaffirmed its FY26 guidance, targeting at least 15.9 cents per security in FFO and 14.0 cents in AFFO. The company expects continued NOI growth supported by leasing momentum, stable cap rates, and proactive capital management initiatives including an on-market security buy-back and asset recycling. Sustainability efforts also remain a priority, with ongoing solar installations and community engagement programs.
Overall, Region Group’s results and strategic positioning reflect a cautious optimism, balancing growth opportunities with defensive asset management in a competitive retail property market.
Bottom Line?
With a strong balance sheet and leadership transition underway, Region Group aims to sustain growth and income resilience into FY26.
Questions in the middle?
- How will the CEO transition impact Region Group’s strategic execution?
- What are the prospects for further portfolio acquisitions or disposals?
- How might changing retail market dynamics affect future rental growth?