This article is from the Australian Property Journal archive
SUBURBAN and regional shopping centres owner Region Group has offloaded another asset in Victoria’s seaside town of Warrnambool, this time for $17.9 million, just as it completed an initial $200 million capital recycling program in the first half of FY25.
Region Group said yesterday it had sold Warrnambool Shopping Centre which is anchored by Target and has 11 specialty stores, including a chemist, bakery and a mix of food, fashion and homewares retailers along with a medical centre.
The sale comes shortly after its $18.5 million divestment of Woolworths-anchored East Warrnambool Shopping Centre, which completed the capital recycling program that generated $196.8 million at an average passing yield of 5.3%.
Region Group increased its funds management platform to more than $680 million in the first half, underpinned by the establishment of Metro Fund 2 with a global institutional investor in November. Proceeds of the capital recycling program were reinvested into a $36.8 million co-investment in Metro Fund 2 and $138.5 million of acquisitions, including the recent purchase of Kallo Town Centre for $64.5 million. Additional proceeds have been used for capital expenditure and temporary debt reduction.
“We remain focused on executing our core strategy of delivering defensive, resilient cashflows to support secure and growing long-term distributions to our security holders,” Region Group said in an ASX statement.
“The resilient Australian consumer and declining retail floorspace per capita should drive opportunities in our existing centres, which is supported by our centre repositioning program.”
Revaluations across the group’s portfolio saw a $34.1 million increase, to $4.316 billion as at 31 December 2024. The “like-for-like” increase was 0.9% or $39.9 million. There were 256 total leasing deals completed with 2.1% average specialty leasing spreads and 85% of expiring tenants retained.
Comparable portfolio moving annual turnover growth of 2.0% was driven by supermarket sales growth of 2.5% and non-discretionary specialty sales growth of 3.2%
Assets under management increased 8.0% over six months to $5.2 billion. Net tangible assets was $2.42 per security with a portfolio weighted average market capitalisation rate of 6.08%
Region Group posted an interim statutory net profit after tax of $81.8 million. Funds from operations (FFO) came in at 7.6c per security, and adjusted FFO at 6.7c. Distributions was 6.7c
Gearing of 32.8% is at the lower end of its target range of 30% to 40%
It said key tenants at the 10,691 sqm expansion of Delacombe Town Centre are now open and trading, with practical completion for the development expected in the early stages of 2025.
It is currently investing $43.2 million in centre repositioning, developments, sustainability and partnering with anchor tenants.
JLL’s Tom Noonan and Stuart Taylor handled the transaction.
