This article is from the Australian Property Journal archive
THE Dexus Industria REIT (DXI) has delivered on its upgraded full-year guidance and is forecasting higher growth in FY25, as its portfolio of warehouses supplies a growing income stream.
Funds from operations (FFO) came in at 17.4c per security, or $55.3 million, a 1.7% increase on FY23. DXI said it expects to deliver FFO per security of 17.8c in FY25, reflecting growth of 2.3%.
Distributions per security will remain steady at 16.4c, reflecting a distribution yield of 5.7%.
“DXI is well positioned to continue generating a secure income stream with embedded rental growth for investors, supported by minimal near-term lease expiries as well as favourable market dynamics with relatively low industrial vacancy and restricted supply,” DXI said.
Some 47% of the portfolio generating average fixed rental growth of 3.2% per annum, and the remainder tied to CPI-linked increases. The portfolio achieved an average rent review of 4.4% during FY24.
Average rent reviews were 4.5%, and like-for-like income growth of 6.3%. Re-leasing spreads of 15.7% were achieved across 72,100 sqm, strengthening to 28.3% in the second half.
DXI posted a statutory net post-tax loss of $11.8 million as a result of property devaluations of $66.3 million, showing a 4.6% decrease as the weighted average capitalisation rate expanded 58 basis points to 5.98%.
Net tangible assets per security decreased 20c, or 5.8%, to $3.24.
DXI’s portfolio comprises interests in 89 properties valued at $1.4 billion, with an occupancy of 99.3% by income and weighted average lease expiry of 5.9 years.
DXI has divested almost $300 million of assets over the past 24 months to strengthen its balance sheet – gearing is now 27.3% below the 30 to 40% target range – and DXI fund manager Gordon Korkie said it would continue to redeploy into its development pipeline, “where we achieve higher returns, with target yields on cost of 6.25% and above, while also improving overall portfolio quality with an investment in modern, highly functional warehouses”.
DXI has a $250 million development pipeline and equates to interests in 306,900 sqm in Sydney and Perth. DXI has circa $163 million of spend remaining on its pipeline, of which $23 million is committed.
At Ascend Industrial Estate at Jandakot Airport, three projects were completed over 43,700 sqm. Two of the warehouses were delivered at an average yield on cost of 5.3% and are fully leased to Marley Spoon and Caddy. In Sydney, construction is underway at a 17,900 sqm multi-unit, last mile development project in Moorebank, where it said solid leasing enquiry has translated to an initial heads of agreement over one of the six units at a record rent for the south-west Sydney market. The project is expected to be delivered in December at a yield on cost of between 6.0% and 6.5%.
DXI said it would focus on retaining balance sheet flexibility, with gearing below the target range, prudent interest rate hedging and liquidity.
