Region Group Boosts Earnings Guidance on Strong 1H FY26 Performance

Solid Financial Foundations

Region Group has delivered a commendable first half for the 2026 financial year, posting a statutory net profit after tax of $180 million. This performance was buoyed by an increase in the fair value of investment properties and a steady rise in funds from operations (FFO) and adjusted funds from operations (AFFO) per security, which grew by 3.9% and 3.0% respectively. These metrics underscore the group's ability to generate resilient cash flows amid a competitive retail property market.

Operational Strength and Leasing Momentum

The operational side of Region Group’s portfolio remains robust, with occupancy climbing slightly to 97.7%. This improvement, alongside the completion of 177 specialty leasing deals, highlights effective asset management and tenant retention strategies. Average specialty rents have also increased, reflecting both market demand and successful lease negotiations. The group's focus on curating a high-quality retail offering appears to be paying dividends, with comparable portfolio sales growth driven notably by supermarkets and discretionary specialty retailers.

Strategic Acquisitions and Capital Deployment

Region Group’s acquisition of the Treendale Home & Lifestyle Centre for $53 million, settled in January 2026, marks a significant addition to its portfolio. This move, alongside ongoing capital expenditure of $32 million invested in centre repositioning and sustainability initiatives, signals a commitment to enhancing asset value and tenant experience. Furthermore, the group has expanded its funds under management by 5.7% through strategic property acquisitions, including assets at West Village, positioning itself for future growth in funds management revenue.

Upgraded Earnings Guidance and Outlook

Reflecting confidence in its operational and financial trajectory, Region Group has upgraded its full-year FY26 earnings guidance. FFO is now expected to grow by 3.2% to 16.0 cents per security, while AFFO guidance has been nudged up to 14.1 cents per security, representing a 2.9% increase. The targeted distribution payout ratio remains approximately 90% of FFO, maintaining an attractive yield for investors. The company’s outlook emphasises continued focus on leasing growth, expense management, portfolio curation, and capital management to sustain secure and growing distributions.

Leadership Transition and Future Focus

Alongside these financial updates, Region Group has noted a CEO transition, a development that will be closely watched by investors for its potential impact on strategic direction. The group’s proactive approach to portfolio management and funds growth suggests it is well-positioned to navigate evolving market conditions while delivering shareholder value.