Region Group · ASX:RGN
Region — Investor Presentation (February 2025)
40 slides from Region's investor presentation, Feb 11, 2025
Slide 1: 1H FY25 Results Presentation
1H FY25 Results Presentation 10 February 2025 Page 1
Slide 2: Agenda
1H FY25 Results Presentation Agenda 1. Overview and Strategy 2. Operational Performance 3. Financial Performance 4. Value Creation Opportunities 5. Outlook 6. Questions 7. Appendices Page 2
Slide 3: 1. Overview and Strategy
1H FY25 Results Presentation 1. Overview and Strategy Anthony Mellowes Chief Executive Officer Page 3
Slide 4: 1H FY25 Interim Results Overview
1H FY25 Results Presentation 1H FY25 Interim Results Overview FY25 AFFO guidance maintained at 13.7 cps AFFO per Distribution Statutory net Financial FFO per security security per security profit/(loss) after tax Performance 7.6 cps 6.7 cps 6.7 cps $81.8m stable1 stable1 100% payout of AFFO vs ($35.
Slide 5: Positioned for growth and unlocking potential in the portfolio
1H FY25 Results Presentation Positioned for growth and unlocking potential in the portfolio Prepared to take advantage of market conditions Solid comparable NOI Strategic capital deployment Foundation for growth • Convenience-based retail sector • $196.8m capital recycling program • Limited interest
Slide 6: Our Strategy
1H FY25 Results Presentation Our Strategy Defensive, Focus on convenience-based retail centres resilient cash flows to support secure Weighted to non-discretionary retail segments and growing long term distributions Long leases to quality anchor tenants to our security holders Optimise value through
Slide 7: 2. Operational Performance
1H FY25 Results Presentation 2. Operational Performance Anthony Mellowes Chief Executive Officer Page 7
Slide 8: Portfolio Overview
1H FY25 Results Presentation Portfolio Overview Strong weighting towards non-discretionary food, health and retail services tenants Yrs 88 2,046 $4,320m 773,629 2,428,270 4.9 years Owned retail No. specialty Total owned Gross lettable Land sqm Weighted average properties tenants portfolio value area
Slide 9: Rental income security
1H FY25 Results Presentation Rental income security High tenant retention with increased annual average specialty rent per sqm drives resilient income 98.1% • Stable portfolio occupancy Overall Lease Expiry • Reduction in specialty vacancy from 4.7% to 4.5%1 (% of gross rent) 45.9% Portfolio • Impro
Slide 10: Partnering with our anchor tenants to drive sales
1H FY25 Results Presentation Partnering with our anchor tenants to drive sales Over 55% of supermarkets generating turnover rent 123 • 46% of total gross rent provides income stability Anchor tenants • Anchor tenant WALE is 6.6 years (by gross rent) 75 • One facility completed in 1H FY25 with a furt
Slide 11: Portfolio Sales Performance
1H FY25 Results Presentation Portfolio Sales Performance Resilient sales despite near term cost of living pressures 3.2% Total portfolio comparable MAT growth by category 31 Dec 2024 30 Jun 2024 Non-discretionary specialty MAT Supermarkets 2.5% 3.0% growth Discount Department Stores 1.7% 1.1% Mini M
Slide 12: Leasing Activity
1H FY25 Results Presentation Leasing Activity Proactive remixing to secure quality everyday essentials tenants Specialty tenant metrics 4.5% 4.2% Renewals 6 months to 31 Dec 2024 6 months to 31 Dec 2023 Specialty vacancy Average annual Number 108 126 improved from 4.7% fixed rent reviews1 GLA (sqm)
Slide 13: Sustainability Update
1H FY25 Results Presentation Sustainability Update Progressing towards FY25 targets ENVIRONMENTAL SOCIAL GOVERNANCE $9.6m Net Zero investment Won the “Community: Small” category Risks and opportunities during the period at the recent Shopping Centre Council included in group wide Australia Marketing
Slide 14: 3. Financial Performance
1H FY25 Results Presentation 3. Financial Performance Evan Walsh Chief Financial and Information Officer Page 14
Slide 15: FFO per security remains stable
1H FY25 Results Presentation FFO per security remains stable Underlying property performance impacted by centre repositioning projects and normalised corporate expenses Investment underway across three centres with completion expected by Jun 2025 2.4% comparable NOI growth ECL provision related to a
Slide 16: Financial Results
1H FY25 Results Presentation Financial Results Interest expense headwinds mitigated by high levels of hedging Statutory profit after tax of $m 31 Dec 24 31 Dec 23 % change $81.8m following positive investment Property income 196.4 191.5 2.6% property revaluation Property expenses (71.9) (67.4) 6.7%
Slide 17: Balance Sheet
1H FY25 Results Presentation Balance Sheet At 31 December 2024 $5.2bn Assets Under Management $m 31 Dec 24 30 Jun 24 % change have increased 8.0% from 30 Jun 2024 Cash and cash equivalents 29.7 19.4 53.1% Investment properties 4,319.7 4,282.3 0.9% Investment properties held for sale - 85.5 nm Gearin
Slide 18: 1H FY25 Property Valuations
1H FY25 Results Presentation 1H FY25 Property Valuations Income growth and stable cap rates drive valuation increase Portfolio Value ($m) 39.9 ( 18.5 ) 4,319.7 16.0 4,282.3 June 2024 Disposals Development capital Like-for-like fair value December 2024 portfolio value¹ expenditure increase portfolio
Slide 19: Proactive capital management
1H FY25 Results Presentation Proactive capital management Providing improved earnings stability through active hedging activity at zero cash cost $1.4bn of interest rate derivative transactions completed No debt expiries until FY27 • FY25 forecast WACD of 4.3% Debt Facilities Expiry Profile ($m) 1.8
Slide 20: 4. Value Creation Opportunities
1H FY25 Results Presentation 4. Value Creation Opportunities Anthony Mellowes Chief Executive Officer Page 20
Slide 21: Recycling capital into accretive opportunities
1H FY25 Results Presentation Recycling capital into accretive opportunities Initial $200m capital recycling program complete with future divestment opportunities being monitored Divesting non-core, lower Reinvestments into higher yielding opportunities with any surplus proceeds yielding properties t
Slide 22: Portfolio Composition Approach
1H FY25 Results Presentation Portfolio Composition Approach Focus on improving the quality of the core portfolio Continued curation of our portfolio composition Largest owner of convenience-based centres with • Settlement of $64.5m Kallo Town Centre acquisition in Jan 2025, a proven transactional tr
Slide 23: Funds Management platform
1H FY25 Results Presentation Funds Management platform Partnering with a global institutional investor focussed on metropolitan neighbourhood centres $680.4m Funds Under Management across 13 retail centres in the Metro Fund1 Metro Fund 2 established in late November 2024 Capital structure 80% joint
Slide 24: Unlocking value through targeted reinvestment
1H FY25 Results Presentation Unlocking value through targeted reinvestment ~$80m forecast capital expenditure to drive portfolio performance 1H FY25 FY25 actual total indicative spend spend • Fund through development of Delacombe Town Centre Stage 2 Development $13.5m ~$20m • Ad hoc planning for oth
Slide 25: Delacombe Town Centre stage 2 now trading
1H FY25 Results Presentation Delacombe Town Centre stage 2 now trading Practical completion expected in early 2025 with further rights to invest in stage 3 Combination of large format retail and specialty tenants underpinned by Woolworths local distribution centre $15.0m investment in land + $26.6m
Slide 26: Centre repositioning – life’s essentials delivered better
1H FY25 Results Presentation Centre repositioning – life’s essentials delivered better Customer experience optimisation to drive asset value and income opportunities REGEN REVIVE • Major internal design and reconfiguration, leasing remix, • Minor ambience upgrades such as signage, car park solar and
Slide 27: 5. Outlook
1H FY25 Results Presentation 5. Outlook Anthony Mellowes and Evan Walsh Chief Executive Officer and Chief Financial and Information Officer Page 27
Slide 28: Strong Australian supply/demand fundamentals
1H FY25 Results Presentation Strong Australian supply/demand fundamentals Outlook for retail floorspace remains limited relative to population growth Retail space rollout (sqm) vs population growth (#) 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 - 2008 2009 2010 2011 2012 2013 20
Slide 29: AFFO Growth Target
1H FY25 Results Presentation AFFO Growth Target Target growth rate in the medium to longer term is 3-4%+ pa Indicative contribution to AFFO growth rate (% pa) Description and Assumptions Medium to longer term 46% of rental income with 56 anchor tenants in turnover rent Anchors rents ~1% Comparable N
Slide 30: Key Priorities and Outlook
1H FY25 Results Presentation Key Priorities and Outlook Key priorities/ outlook Earnings guidance • Moderating operating expenses and target full year FY25 Assuming no significant change in market conditions, comparable NOI growth of 3% FY25 earnings guidance is: • With 94% of debt hedged in FY25 an
Slide 31: 6. Questions
1H FY25 Results Presentation 6. Questions Page 31
Slide 32: 7. Appendices
1H FY25 Results Presentation 7. Appendices Page 32
Slide 33: Assets Under Management
1H FY25 Results Presentation Assets Under Management 2,252 specialty tenants across 101 retail properties Our Portfolio List is available at regiongroup.au/investor-centre/reports-presentations/ Page 33
Slide 34: Key Tenants Under Management
1H FY25 Results Presentation Key Tenants Under Management High quality, defensive tenants anchoring the portfolio Top 10 tenants by gross rent Total RGN Metro Fund Woolworths Group 29.4% Woolworths 70 59 11 Coles Group 9.2% Wesfarmers 4.2% Big W 11 11 - The Reject Shop 1.4% Woolworths Limited 81 70
Slide 35: Income Statement: Statutory Profit to AFFO Reconciliation
1H FY25 Results Presentation Income Statement: Statutory Profit to AFFO Reconciliation For the period ended 31 December 2024 Statutory profit FFO AFFO AFFO 6 months to 6 months to 6 months to % change adjustments $m 31 Dec 2024 31 Dec 2024 31 Dec 2023 Anchor rental income 77.3 - 77.3 76.8 0.7% Speci
Slide 36: Outgoings Recoveries
1H FY25 Results Presentation Outgoings Recoveries 73% recovery rate of recoverable specialty expenses • Total property expenses of $72.9m include: Total Net Recovery Recoverable property property rate − $56.2m of property expenses can be recovered from our income $m expenses expenses (%) tenants wit
Slide 37: Covenants
1H FY25 Results Presentation Covenants Gearing (%) $m 31 Dec 2024 30 Jun 2024 Bilateral and syndicated facilities – 33.3% 34.0% unsecured 32.8% 32.9% 32.8% 31.4% 31.2% 31.3% 31.3% Bank and syndicated facilities drawn 477.0 471.8 28.3% 477.0 471.8 25.6% AU$ MTN – unsecured Unsecured AU$ Medium term n
Slide 38: Debt facilities & interest rate hedging
1H FY25 Results Presentation Debt facilities & interest rate hedging Financing Facility limit Drawn debt Maturity / Notes capacity A$m A$m A$m Bank and syndicated facilities Bank bilateral facility 275.0 235.0 40.0 FY27: $225m Oct 2026, and $50m May 2027 Bank bilateral facility 150.0 - 150.0 FY28: $
Slide 39: Glossary
1H FY25 Results Presentation Glossary AFFO: Adjusted Funds From Operations is determined by Look-through gearing: pro forma gearing including our adjusting FFO for other items which have not been adjusted 20% interest in the Metro Fund in determining FFO MER: Management Expense Ratio (statutory corp
Slide 40: For further information, please contact:
For further information, please contact: Anthony Mellowes Evan Walsh Nicolette Brice Chief Executive Officer Chief Financial and General Manager Investor Relations T: +61 2 8243 4900 Information Officer T: +61 2 8243 4900 E: anthony.mellowes@regiongroup.au T: +61 2 8243 4900 E: nicolette.brice@regio