This article is from the Australian Property Journal archive
INDUSTRIAL and logistics landlord Dexus Industria REIT (DXI) continued its asset optimisation program in the first half, while it is expecting strong portfolio income growth to continue through FY24.
The trust said it is on track to deliver full-year guidance with half-year funds from operations per security increasing 0.5% to $27.3 million (or 8.6c per security) and distributions of 8.2c.
It posted a statutory net loss after tax of $10.2 million due to $36.1 million in valuation losses on investment properties, equivalent to 2.5% of total portfolio value, and derivatives.
That was offset by a strong operating performance. Portfolio like-for-like income growth was 7.3%.
DXI sold off $135 million of assets in the half to “repay debt and provide balance sheet resilience and redeployment optionality”, extending its divestment run to $300 million over the past 18 months.
“We continued to divest properties during the half to ensure the balance sheet is well capitalised, and to provide the flexibility to invest in higher-returning opportunities,” said Gordon Korkie, DXI fund manager.
“We are well placed to fund our future commitments, including the development pipeline at target yields on cost of 6% or more.”
Among the divestments in the half were warehouses in the Melbourne suburbs of Kilsyth and Dandenong for a combined $45 million, just above book value, and two logistics buildings in Stapylton on the Gold Coast.
DXI leased 23,600 sqm in the half, making for 163,700 sqm of space over the last 18 months. Korkie said this has reduced upcoming expiries amidst and supported income growth through averaging double-digit re-leasing spreads.
Some 46% of the portfolio generates average fixed rental growth of 3.2% per annum, with the remainder tied to CPI-linked increases. During the half, the portfolio achieved an average rent review of 4.8%
At Brisbane Technology Park, occupancy by income increased 10 percentage points to 95.7% following 4,400 sqm of leasing, which supported like-for-like growth of 15.4%
In December, it announced it had secured development approval for its Moorebank last-mile industrial estate in Western Sydney, which is co-owned with Dexus. DXI has circa $167 million of spend remaining on its total development pipeline, of which $42 million is committed. The total pipeline is valued at $269 million and equates to interests in 331,400 sqm in major hubs in Sydney and Perth’s Jandakot Airport.
DXI reaffirmed FY24 guidance for FFO of 17.1c per security and for distributions of 16.4c, reflecting a distribution yield of 6.0%.
