Key Highlights

• Stronger leasing activity pushed portfolio occupancy closer to full capacity.
• Extensive debt refinancing improved funding flexibility amid elevated interest rates.
• Management expects earnings growth to continue, subject to stable market conditions.

Earnings and Distributions Rise

Region Group (ASX: RGN) announced its FY26 results on 18 August 2026, delivering growth in underlying earnings, asset values and security holder distributions. Statutory net profit after tax totalled AU$268.8 million, while funds from operations rose 3.2% to AU$184.7 million.

FFO increased to 16.0 cents per security, compared to 15.5 cents in FY25. Adjusted funds from operations reached AU$162.7 million, representing growth of 2.9% and 14.1 cents per security. The group distributed the entire AFFO amount, increasing its annual distribution to 14.1 cents per security from 13.7 cents previously.

Net tangible assets increased 4.0% to AU$2.57 per security. Region also generated a total security holder return of 9.8% for the year, exceeding the performances of the S&P/ASX 200 Index and the S&P/ASX 200 A-REIT Index.

Leasing Conditions Support Portfolio Growth

Comparable net operating income expanded 3.3% as demand remained healthy across the group’s supermarket-led retail assets. Comparable supermarket sales advanced 4.1%, contributing to a 3.3% increase in comparable sales across the broader portfolio.

Occupancy improved to 98.1%, compared to 97.5% in FY25. Region completed 380 specialty leasing agreements during the year, securing average leasing spreads of 4.0% and average annual rental increases of 4.4%. Assets under management also expanded 5.5% to AU$5.53 billion.

Region’s concentration on supermarkets, essential services and everyday retail categories supports relatively stable rental income. Non-discretionary tenants account for approximately 88% of portfolio income, reducing the group’s dependence on more volatile discretionary spending.

Refinancing Preserves Financial Capacity

More than AU$1 billion of borrowings were refinanced at lower margins. Region fully hedged or fixed its borrowings at an average base rate of 2.9% before margins, while the overall weighted average debt cost stood at 4.5%.

Pro forma gearing stood at 34.1%, remaining below the midpoint of the targeted 30%–40% range. Cash and available undrawn debt facilities totalled AU$209.5 million, leaving capacity for asset improvements, carefully selected acquisitions and further partnership investments.

FY27 Outlook Points to Continued Progress

Assuming market conditions remain broadly unchanged, Region forecasts FY27 FFO growth of 3.0% to 16.5 cents per security. AFFO is also expected to rise 3.0% to 14.5 cents, with approximately 100% distributed to security holders. High occupancy and positive leasing conditions provide a solid earnings base. Nevertheless, financing expenses, property valuations and effective capital allocation will influence whether the group converts its portfolio momentum into sustained growth.

Note- All data presented is based on information available at the time of writing.

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