Region Group's Earnings Growth Should Resume Once Debt Costs Peak
Region Group (formerly Shopping Centres Australasia Property Group) owns and manages a portfolio of near 100 smaller shopping centers in Australia. Gross rental income is about evenly sourced from anchor tenants such as supermarkets and smaller specialty tenants. The REIT was created in 2012 when Woolworths sold a portfolio of its centers and leased back the supermarket sites within them. Region Group has since bought and sold various assets (including divesting its New Zealand portfolio). Woolworths remains its largest tenant, providing about a third of gross rent. Coles is about 10% and other tenants include Big W, Wesfarmers, and Aldi. Three fourths of assets (by value) are classified neighborhood and the other fourth is subregional, and most centers are in suburban or regional areas. The portfolio is relatively young, meaning just under a half of anchor tenants have hit thresholds where turnover rent becomes payable.