This article is from the Australian Property Journal archive
SHOPPING centre owner Region Group swung to full-year profit in FY24, while funds from operations (FFO) and distributions slipped, as it all but completed its $200 million capital recycling program and before going on to expand its funds management platform.
It announced a statutory net profit tax of $17.3 million, compared to last year’s $123.6 million loss.
FFO was 15.4c per security, down from 16.9c per security. Adjusted FFO (AFFO) was 13.6c, down from 15.3c.
Region Group is forecasting FY25 FFO of 15.5c per security and AFFO of 13.7c per security.
Distributions dropped from 15.2c per security in FY23 to 13.7c in FY24.
Earlier this month, Region Group significantly increased the scale of its funds management platform through the establishment of the $393.9 million Metro Fund 2 with Singaporean sovereign wealth fund GIC.
Since May 2023 Region Group divested $176.7 million of properties, at an average passing yield of 5.3%, which it said “largely concludes” its $200 million capital recycling program. Among those were the Soda Factory in Brisbane’s West End, for $42 million and Riverside Plaza in Tasmania for $14 million.
In May, it made its first purchase in nearly two years with the $74 million acquisition of Cooleman Court in Canberra, on an implied initial yield of 6.73%.
Elsewhere in its $4.368 billion, 92-asset portfolio, it continued construction on the 11,000 sqm expansion of Delacombe Town Centre, with an estimated completion date of December this year.
“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,” it said.
Region Group recorded net operating income growth of 3.0%, which it is targeting going forward, whilst “undertaking selective capital transactions and centre repositioning strategies”.
Portfolio occupancy improved from 97.8% to 98.1% with specialty tenant vacancy reducing from 5.0% to 4.7%. It recorded 552 total leasing deals completed with 4.0% average specialty leasing spreads and 83% of expiring tenants retained.
Comparable portfolio moving annual turnover growth of 2.5% was driven by supermarket sales growth of 3.0% and non-discretionary specialty sales growth of 4.1%. Woolworths accounts for 28% of its portfolio by tenant, and specialties and mini-majors account for 53%.
