Highlights

  • Region Group reported FY26 statutory net profit after tax of $268.8 million, with FFO increasing 3.2% to 16.0 cents per security.
  • AFFO rose 2.9% to 14.1 cents per security, with 100% distributed to security holders.
  • NTA increased 4.0% to $2.57 per security, while portfolio occupancy improved to 98.1% from 97.5%.
  • FY27 guidance targets 3.0% growth in both FFO to 16.5 cents per security and AFFO to 14.5 cents per security.

Region Group (ASX:RGN) reported statutory net profit after tax of $268.8 million for the year ended 30 June 2026, alongside increases in its key operating Earnings measures.

Funds from operations rose 3.2% from FY25 to 16.0 cents per security, while adjusted funds from operations increased 2.9% to 14.1 cents per security. Region Group said 100% of AFFO was distributed to security holders during the year.

Net tangible assets increased 4.0% to $2.57 per security. The increase came alongside continued operational growth across the group's essential retail property portfolio.

Retail Portfolio Delivers Higher Income

Comparable net Operating Income increased 3.3% during FY26. Comparable moving annual turnover also rose 3.3%, supported by supermarket MAT growth of 4.1%.

Supermarkets remain a key component of Region Group's portfolio performance. Approximately 58% of supermarkets were generating turnover rent, while another 15% were within 10% of the relevant turnover-rent threshold.

Leasing activity also produced positive rental outcomes. Region Group completed 380 specialty leasing deals during the year, achieving average leasing spreads of 4.0% and average annual rent increases of 4.4%. The average Lease term for new deals increased to 6.3 years.

Portfolio occupancy improved to 98.1% at the end of FY26, compared with 97.5% a year earlier. The increase indicates higher occupied space across the essential retail portfolio and provides a larger base of income-producing properties.

Portfolio Activity and Institutional Partnership

During FY26, Region Group continued to adjust its property portfolio through acquisitions and divestments. The group also expanded its existing Metro Fund Partnership with a global institutional investor.

The portfolio strategy remains focused on essential retail properties, with supermarkets and other convenience-oriented tenants providing a significant component of the operating performance. Region Group said its scale and internally managed structure support its approach to leasing, asset management and portfolio optimisation.

The company reported a 9.8% security holder return over FY26, which it said exceeded the performance of both the ASX 200 index and the ASX 200 A-REIT Index.

Debt Refinancing and Capital Management

Capital management was another focus during FY26. Region Group refinanced more than $1 billion of Debt at improved borrowing margins.

Weighted average cost of debt was 4.5% per annum, with 100% of debt hedged or fixed at an average underlying rate of 2.9% before margin. The company also reported pro forma gearing below the midpoint of its target 30% to 40% range.

Region Group had more than $200 million of undrawn debt capacity at the end of the reporting period. The combination of available debt capacity and the high proportion of hedged debt provides visibility over financing costs and funding capacity under its current capital structure.

FY27 Earnings Guidance

For FY27, Region Group is forecasting FFO of 16.5 cents per security, representing growth of 3.0% from FY26. AFFO is expected to increase by 3.0% to 14.5 cents per security.

The company expects its distribution Payout Ratio to remain approximately 100% of AFFO. The guidance assumes no significant change in market conditions and is based on information available at the time of the FY26 results announcement.

The outlook reflects expectations for continued organic growth across the essential retail portfolio, supported by leasing activity, supermarket performance and portfolio management.

Conclusion

Region Group's FY26 results showed growth across its principal operating measures, with FFO rising 3.2%, AFFO increasing 2.9% and NTA advancing 4.0%. Comparable NOI and MAT both increased 3.3%, while supermarket MAT grew 4.1% and occupancy improved to 98.1%. The group also refinanced more than $1 billion of debt at improved margins, with all debt hedged or fixed. For FY27, Region Group is targeting 3.0% growth in both FFO and AFFO, although future performance remains dependent on property income, leasing conditions, financing costs and broader market conditions.