Region Group

For FY'26, Region Group reported statutory net profit of $268.8 million, NTA up 4% to $2.57 per security, FFO of $0.16 per security and AFFO of $0.141 per security. Comparable supermarket MAT growth was 4.1%, total comparable portfolio MAT growth was 3.3%, portfolio occupancy reached 98.1%, and comparable NOI growth was 3.3%; specialty leasing spreads averaged 4% and average annual rent increases were 4.4%. FFO per security increased by 3.2% year on year, and distribution per security was $0.141, up 2.9% from FY'25. Looking to FY'27, management guided to 3% growth in FFO to $0.165 per security and 3% growth in AFFO to $0.145 per security, with a 100% payout ratio of AFFO and no transactional activity assumed beyond what was already disclosed.

Gregory Chubb framed the business as a resilient, supermarket-led essential retail platform with room to unlock more value from the existing portfolio. He said the strategy is now shifting toward more proactive organic growth through active asset management, specialty and majors leasing optimization, and targeted investment, while still pursuing selective divestments and partnership-led growth. His tone was confident and constructive, repeatedly emphasizing disciplined capital allocation and a focus on higher-return, smaller-scale projects.

David Salmon highlighted that FY'26 FFO per security rose 3.2%, supported by comparable NOI growth of 3.3% and contributions from inorganic activity. He noted that total assets under management were $5.5 billion, gearing was 34.1%, and NTA increased to $2.57 per security; he also said the portfolio was revalued up $224 million, or 5.1%, and capitalization rates firmed by 11 bps to 5.86%. On capital management, he said more than $1 billion of debt was refinanced at improved margins, weighted average borrowing margin fell from 1.6% to 1.5%, and FY'26 WACD was 4.5%; for FY'27 he expects WACD around 4.6% and borrowing margins around 1.4% or slightly better.

Analysts focused on what it would take to reach the top end of growth guidance, with management saying the FY'27 3% AFFO guide excludes any inorganic activity and could move closer to 4% if Metro Fund activity were similar to FY'26. Questions also centered on capital allocation, with Greg ranking priorities as asset enhancement projects first, then buybacks, then acquisitions, while saying buybacks are currently de-prioritized in favor of reinvestment. Management also said the near-term focus is divesting smaller, lower-growth assets to fund higher-return projects, and that FY'27 cost growth should be similar to FY'26, with property-level expenses expected around 2.5% and debt costs around 4.6%.