Business
Region : FY25 Annual Report (RGN)
Region : FY25 Annual Report
About this update from Region Group
FY25 Annual Report Supporting better communities through life's essentials. FY25 Annual Report Contents About Us Our Property Portfolio Our Strategy Our Performance Directors' Report Remuneration Report Financial Statements Directors' Declaration Auditor's Report Historical Key Metrics Security Analysis Directory Contents Corporate Calendar 1 About Us 2 Group Structure 3 Our FY25 Performance Highlights 4 Message from the Chair and CEO 6 Our Property Portfolio 8 Our Strategy 13 Our Performance 14 Directors' Report 28 Remuneration Report 41 Consolidated Financial Statements 75 Notes to the Consolidated 81 Financial Statements Directors' Declaration 111 Independent Auditor's Report 112 Historical Key Metrics 118 Security Analysis 120 Directory 122 Meeting of Security Holders This year's AGM will start at 2pm (AEDT) on Tuesday 21 October 2025. For further information, visit https://www.regiongroup.au/agm/ Corporate Calendar 21 October 2025 Meeting of security holders December 2025 Estimated interim distribution announcement and securities trade ex-distribution January 2026 Interim distribution payment February 2026 Interim results announcement June 2026 Estimated final distribution announcement and securities trade ex-distribution August 2026 Full year results announcement August 2026 Final distribution payment August 2026 Annual tax statement Security Holders Register Details You can view your holdings, access information and make changes by visiting au.investorcentre.mpms.mufg.com/login Responsible Entity Region RE Limited (ABN 47 158 809 851, AFSL 426603) Region Group comprises Region Management Trust (ARSN 160 612 626) and Region Retail Trust (ARSN 160 612 788), together, Region Group or RGN. Sustainability Our Sustainability Report is located on our website regiongroup.au/sustainability Miami One Shopping Centre, QLD 1 FY25 Annual Report Contents About Us Our Property Portfolio Our Strategy Our Performance Directors' Report Remuneration Report Financial Statements Directors' Declaration Auditor's Report Historical Key Metrics Security Analysis Directory About Us REGION GROUP STAPLED SECURITIES We are passionate about making life's essentials easy and inspiring, enabling communities to thrive and grow. Region Management Trust 1 Stapling deed/provisions Region Retail Trust 1 Region Group is an internally managed real estate investment trust (REIT) with 87 convenience-based retail properties, valued at $4,374 million. We remain the largest owner of convenience-based retail centres with 7% share of the market, which is dominated by private owners. This asset class has proven to be resilient due to its exposure to non-discretionary retail categories, including long leases with grocery-based anchor tenants. Woolworths Group Limited (Woolworths) and Coles Group Limited (Coles) are our anchor retail partners at more than 97% of our properties. Region (originally SCA Property Group ASX: SCP) was created out of Woolworths in late 2012, when OUR PURPOSE Our purpose is supporting better communities through life's essentials. Our centres, directly and indirectly, provide employment for thousands of people and help support the economic resilience of their local communities. Our customers are at the heart of our strategy. This means the places we create will deliver both a practical and positive experience, as we work to be the first choice for essentials at a place nearby. Our positioning means we are resilient as a business, capable of delivering growth to our security holders, people, customers and the communities we serve. Region REIT Holdings Pty Ltd Region RE Limited 1 Region Operations Pty Ltd Australian Retail Properties Metro Fund 2 ownership in a number of retail properties was transferred. Since November 2022, we have been operating under our new name, Region Group (ASX: RGN). Our Region people are experts in their field, and place great value in trust, collaboration, innovation and leadership. Region RE Limited is the Responsible Entity of Region Management Trust and Region Retail Trust Region RE Limited as Responsible Entity of Region Retail Trust owns 20% of SCA Metro Convenience Shopping Centre Fund and Matrix Trust (collectively, Metro Fund) OUR VALUES ACHIEVEMENT ONE TEAM Innovation We embrace doing things differently to get people what they need, when and how they want it. Trust Our word is our bond. Leadership We stand for what people need and show the way forward. Collaboration We achieve and grow together as one team. Kallo Town Centre, VIC 2 3 FY25 Annual Report Contents About Us Our Property Portfolio Our Strategy Our Performance Directors' Report Remuneration Report Financial Statements Directors' Declaration Auditor's Report Historical Key Metrics Security Analysis Directory STATUTORY NET PROFIT AFTER TAX $ 212.5 m FINANCIAL PERFORMANCE ASSETS UNDER MANAGEMENT $ 5.2 bn OPERATIONAL PERFORMANCE COMPARABLE MAT GROWTH 3.1 % AVERAGE ANNUAL SPECIALTY FIXED RENT REVIEWS 4.3 % AVERAGE SPECIALTY LEASING SPREADS 3.7 % COMPARABLE NOI GROWTH 3.2 % CAPITAL MANAGEMENT PORTFOLIO WEIGHTED AVERAGE CAP RATE 5.97 % ON-MARKET SECURITY BUY-BACK 2.2 m securities purchased at an average price of $2.30 NTA PER SECURITY $ 2.47 WACD 4.3 % pa with 97% hedged/ fixed debt 5 ADJUSTED FUNDS FROM OPERATIONS 13.7 ¢ per security Our FY25 Performance Highlights FUNDS FROM OPERATIONS DISTRIBUTION 15.5 ¢ per security 13.7 ¢ per security Kallo Town Centre, VIC 4 FY25 Annual Report Contents About Us Our Property Portfolio Our Strategy Our Performance Directors' Report Remuneration Report Financial Statements Directors' Declaration Auditor's Report Historical Key Metrics Security Analysis Directory Message from our Chair and CEO Steven Crane (left) and Anthony Mellowes (right) On behalf of our fellow Directors, we are pleased to deliver our FY25 Annual Report. We are committed to delivering on our strategy to ensure defensive, resilient cash flows to support secure and growing long-term distributions to our security holders. Operational performance Our convenience-based retail centres continue to benefit from a mix of high quality supermarket anchor retail partners and focus on non- discretionary specialty tenants. As at 30 June 2025, our portfolio comparable Moving Annual Turnover (MAT) sales growth of 3.1% was driven by 3.3% growth in supermarkets and 3.7% growth in non-discretionary specialty tenants. Our portfolio is 97.5% occupied with a strong weighted average lease expiry of 4.9 years and over 88% of gross rent generated from non-discretionary tenants. During the year we retained 81% of tenants and achieved average leasing spreads of 3.7% across 372 specialty leasing deals. Our team continues to deliver on increased annual fixed rent reviews which have improved from 4.1% in FY24 to 4.3% in FY25 and are applied across 94% of specialty and mini major tenants. As a result, the average specialty rent has increased to $919 per sqm which equates to an annualised growth rate of 5.0% since FY22. Financial performance In FY25 we achieved a $212.5 million statutory profit after tax following positive investment property revaluations. We also returned to modest earnings growth in Funds from Operations (FFO) of 15.5 cps and Adjusted Funds from Operations (AFFO) of 13.7 cps. These increased by 0.6% and 0.7%, respectively. Our FY25 distribution is in line with 100% of AFFO and FY24. During the year, we achieved comparable NOI growth of 3.2% and continued to recycle capital into accretive transactions. Our balance sheet is strong with more than $5.2 billion Assets Under Management (AUM), an increase of 8.7% over the year which is largely attributable to an increase in Funds Under Management (FUM). We remain proactive with our approach to capital management. Gearing of 32.5% is at the lower end of our 30-40% target range and our weighted average cost of debt (WACD) remained consistent year on year at 4.3%. Almost 97% of debt was hedged or fixed during FY25. During the year we also announced an on-market securities buy-back for up to $100.0 million of the Group's securities on issue. As at 30 June 2025, 2.2 million securities have been bought-back and cancelled at an average price of $2.30, for a total consideration of $5.0 million. The balance sheet provides a secure platform for growth with $313.3 million of available liquidity and an average debt maturity of 4.3 years. There are no debt expiries until FY27. Value creation opportunities We continue to actively manage our portfolio composition in line with our investment criteria. During the year, we acquired Kallo Town Centre for $64.5 million, a neighbourhood centre anchored by Woolworths and strategically located in a growth corridor 30km north of Melbourne's CBD. Including the assets held for sale at 30 June 2024, we also divested six non-core neighbourhood centres and one Bunnings for $227.5 million. We are pleased to note that the Delacombe Town Centre Stage 2 development reached practical completion and is now 88% leased by GLA. During the year we also invested $29.0 million into centre repositioning projects which enhance the customer experience and therefore drive rental growth. Finally, our FUM more than doubled during the year to $711.5m following the addition of another Metro Fund with our global institutional partner in November 2024. After the financial year end, the Metro Fund exchanged on the acquisition of Dalyellup Shopping Centre in WA for $35.8 million which will contribute to future funds management growth. The next 12 months The retail shopping centre supply and demand fundamentals remain strong in Australia. There continues to be interest in the defensive, non-discretionary sector with 50 neighbourhood and sub-regional centres that have transacted for a total of ~$3.2 billion over the past year. Retail sentiment continues to improve and valuations in the sector have troughed. We remain concentrated on delivering defensive, resilient cash flows to support secure and long-term distributions to our security holders. To achieve this, our focus for FY26 will continue to be on: Improving our comparable NOI through strong leasing, increased fixed rent reviews and proactive expense management Curating our portfolio through selective acquisitions and disposals Reinvesting in our centres to drive value Growing our funds under management Maintaining a proactive approach to capital management including an on-market security buy-back, asset recycling and interest rate hedging Assuming no significant change in market conditions, our FY26 earnings guidance is at least: FFO of 15.9 cps AFFO of 14.0 cps Target distribution per security payout ratio: ~90% of FFO ~100% of AFFO Supporting better communities through life's essentials is the foundation to our strategy. Our balance sheet remains strong and positions us for growth, our strategy is sound, and our properties remain resilient. On behalf of our team, we thank you for your continued support and confidence in Region. Steven Crane Chair Anthony Mellowes Chief Executive Officer 6 7