Region Group (ASX: RGN) delivered solid FY26 results with a 3.2% increase in Funds From Operations per security, a 9.8% total security holder return, and a leadership change as Greg Chubb took the helm as CEO.
- 3.2% growth in FFO per security to 16.0 cents
- Portfolio occupancy rises to 98.1% with 3.3% NOI growth
- Over $1 billion debt refinanced at improved margins
- Greg Chubb appointed CEO, succeeding Anthony Mellowes
- Committed to net zero Scope 1 and 2 emissions by FY30
Financial and Operational Momentum in FY26
Region Group (ASX:RGN) closed FY26 on a high note, reporting a 3.2% increase in Funds From Operations (FFO) per security to 16.0 cents and a 2.9% rise in Adjusted Funds From Operations (AFFO) per security to 14.1 cents. The portfolio occupancy improved to 98.1%, up from 97.5% the previous year, while comparable net operating income (NOI) grew 3.3%. Supermarket comparable sales led the way with a 4.1% increase, underpinning the essential retail portfolio’s resilience.
These operational gains translated into a 9.8% total security holder return for the year, comfortably outperforming the ASX 200 and ASX 200 A-REIT indices. Region’s portfolio, valued at $4.6 billion, comprises 86 supermarket-led essential retail properties, with Woolworths and Coles anchoring over 97% of the portfolio. Specialty leasing activity remained robust, with 380 deals completed at positive spreads averaging 4.0% and annual rent increases of 4.4%.
Capital Management and Balance Sheet Strength
Region Group’s disciplined capital management was a highlight in FY26. The Group refinanced more than $1 billion of debt at improved margins, reducing its weighted average borrowing margin from 1.6% to 1.5%, despite a 20 basis point increase in the weighted average cost of debt (WACD) to 4.5%. All debt was fully hedged or fixed at an average rate of 2.9% before margin, insulating the Group from interest rate volatility.
Cash and undrawn debt facilities stood at $209.5 million at year-end, with no debt maturities until FY28 and an average debt maturity of 3.8 years. Pro forma gearing was 34.1%, comfortably within the Group’s target range of 30-40%. The Group also continued its on-market buy-back program, purchasing 12.7 million securities for $29.2 million, supporting NTA growth to $2.57 per security, a 4.0% increase over FY25.
Portfolio Optimisation and Growth Initiatives
FY26 saw active portfolio management with the divestment of two lower growth centres for $32.8 million and the acquisition of Treendale Home & Lifestyle Centre in WA for $53.0 million, strategically positioned opposite an existing centre. The Group also expanded its Metro Fund partnership, acquiring Dalyellup Shopping Centre and three strata properties, increasing assets under management by $124.8 million.
Capital expenditure focused on targeted enhancements, including a $6 million Woolworths store extension at North Orange Shopping Centre and specialty-led upgrades at Pakenham Marketplace. New developments such as a standalone Aldi and dining precincts at Kwinana Marketplace and Greenbank Shopping Centre are underway, aiming to deliver incremental returns exceeding 7%.
Leadership Transition and Governance
Greg Chubb was appointed Managing Director and CEO in March 2026, succeeding Anthony Mellowes, who retired after 13 years at the helm. Chubb brings over 30 years of retail and real estate experience, including leadership roles at Link REIT and Charter Hall. The Board also saw the retirement of Non-Executive Director Michael Herring in July 2026, with a search underway for his replacement.
The Board and management reaffirmed their commitment to disciplined execution, capital discipline, and risk management, underpinning confidence in delivering sustainable growth and security holder returns.
Sustainability Progress and Targets
Region Group advanced its sustainability agenda with over $40 million invested in solar photovoltaic (PV) projects, achieving 21.8MW installed across 33 sites by FY26 and committing to net zero Scope 1 and 2 greenhouse gas emissions by FY30. Six retail centres underwent climate change impact assessments, covering approximately 36% of the portfolio. Social initiatives included 2,112 volunteer hours donated to local causes and support for 128 students through a partnership with The Smith Family.
Environmental, social, and governance (ESG) considerations remain embedded in Region’s strategy, balancing operational performance with community impact and long-term resilience.
Looking Ahead: FY27 Guidance and Strategic Focus
Guidance for FY27 projects continued momentum with expected FFO growth of 3.0% to 16.5 cents per security and AFFO growth of 3.0% to 14.5 cents per security, with distributions targeted at approximately 100% of AFFO. The Group plans to maintain its focus on organic growth through active asset management and selective inorganic growth via portfolio optimisation and partnerships.
Region’s integrated operating platform, scale, and retailer relationships are positioned to support these objectives amid favorable market conditions. However, execution risks and macroeconomic uncertainties remain factors to monitor as the Group pursues its growth pathways.
Bottom Line?
Region Group’s FY26 results and leadership renewal set a solid base for disciplined growth, but execution and market conditions will test its strategy in FY27 and beyond.
Questions in the middle?
- How will Region Group balance capital recycling with growth in a rising interest rate environment?
- What impact will the new CEO’s strategic evolution have on portfolio composition and tenant mix?
- Can sustainability initiatives translate into tangible operational efficiencies and tenant demand?