Region Group Maintains FY27 Guidance as Centre Sales Open New Growth Path

FY27 Guidance Survives Portfolio Repositioning

Region Group (ASX:RGN) has kept its FY27 earnings guidance intact while moving to sell three neighbourhood centres for a combined $73.5 million, giving investors a clearer look at new chief executive Greg Chubb’s approach to portfolio optimisation. The contracts have been exchanged but the announcement does not say the transactions have completed.

Region continues to forecast funds from operations of 16.5 cents per security and adjusted funds from operations of 14.5 cents per security, each representing 3.0% growth. The target distribution payout remains approximately 100% of AFFO, with the guidance conditional on no material change in market conditions.

Essential Retail Metrics Strengthen in FY26

The operating numbers behind the guidance were solid. Portfolio occupancy increased to 98.1% from 97.5%, comparable supermarket sales grew 4.1%, and comparable net operating income rose 3.3%. Region completed 380 specialty leasing deals, achieving average annual rent increases of 4.4% and leasing spreads of 4.0%.

Those results translated into 3.2% growth in FFO per security and 2.9% growth in AFFO per security, with all AFFO distributed to security holders. Excluding the effect of a higher weighted average cost of debt, the company said both measures grew by more than 5%. Region reported a 9.8% total security holder return for FY26, which it said outperformed the ASX 200 and ASX 200 A-REIT indexes.

The latest address reinforces the numbers reported in the FY26 results , where Region also reported 16.0 cents of FFO per security and the appointment of Chubb after Anthony Mellowes’ 13-year tenure as chief executive. Chubb, who has been in the role for seven months, said the company’s momentum in comparable sales and specialty leasing had continued into the first quarter of FY27.

Capital Recycling Meets Organic Growth

Management’s stated strategy combines active leasing and targeted asset enhancements with selective acquisitions and portfolio recycling. The proposed centre sales fit that framework, although the filing does not identify the assets, their sale prices individually or how the proceeds will be deployed.

Region said 88% of total income comes from non-discretionary retailers, while Woolworths, Coles, Aldi, Wesfarmers and other major retailers account for 45% of gross rent. The portfolio generates more than $5 billion in annual supermarket sales and includes more than 2,200 specialty retailers, giving the group a defensive operating profile but also leaving execution and tenant performance central to the FY27 outlook.

New Leadership Sets Execution Priorities

Chubb said the next phase would focus on active asset management, disciplined investment and consistent execution across the national portfolio. Region also reported 100% of debt hedged or fixed at an average rate of 2.9% before margin, a 4.5% weighted average cost of debt, and $209.5 million of cash and undrawn debt capacity at FY26.

The group installed 21.8 megawatts of solar capacity across 33 centres by year-end, with another 3.2 megawatts in design, and said it remains on track for mandatory Australian Sustainability Reporting Standards requirements in FY27. The sustainability program is progressing alongside the commercial plan, rather than replacing it: the immediate test is whether asset recycling can support growth without weakening the income resilience that underpins the guidance.