In This Article:
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FFO (Funds From Operations): $0.104 per security.
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Distributions: $0.103 per security.
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Gearing: 28.7%, at the lower end of the target range.
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NTA (Net Tangible Assets): Increased by 0.3% to $3.57 per security.
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Divestments: $38.8 million executed, improving portfolio quality.
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Property Valuations: Increased by 0.5% on prior book values.
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Portfolio Capitalisation Rate: 6.41%.
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Asset Divestments: 22 assets totaling over $100 million.
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FY25 Guidance: FFO and distributions per security of $0.206, with a distribution yield of over 7%.
Release Date: February 09, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Dexus Convenience Retail REIT (ASX:DXC) delivered FFO of $0.104 and distributions of $0.103 per security, maintaining a resilient income stream backed by high-quality tenant covenants.
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The company executed $38.8 million in divestments, improving overall portfolio quality and reducing gearing to 28.7%, which is at the lower end of their target range.
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The redevelopment of the northbound site at Glass House Mountains is fully pre-leased and expected to generate attractive returns above DXC's cost of capital.
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DXC's portfolio reflects a high-yielding, valuable land bank with a majority in metro and highway locations, supporting long-term transport and travel needs.
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The company maintains a carbon-neutral position across its controlled asset base and is actively engaging with tenants to support ESG objectives, including the installation of solar and EV charging stations.
Negative Points
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FFO and distributions per security were 1% below the prior corresponding half due to a 60-basis point increase in the average cost of debt and moderate dilution from asset divestments.
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The anticipated total capital cost of the Glass House redevelopment has increased, reflecting upward adjustments to rental terms with major tenants.
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The expected expenditure for Stage 2 of the Glass House redevelopment has increased, with several moving parts still to be finalized.
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Despite a higher interest rate environment, the company faces challenges in maintaining strong pricing for assets, particularly those with QSR retailing attached.
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The company has not undertaken significant hedging activities during the period, which could expose it to interest rate fluctuations in the future.
Q & A Highlights
Q: Good morning, Jason. Just noting that the CapEx or the anticipated total capital cost of Glass House redevelopment has increased a little bit over the last six months. Could you unpack why that was and highlight what the redevelopment entails at this point? A: The increase reflects an upward adjustment to rental terms agreed with the major tenant, which affects the price paid but not the profitability of Stage 1. For Stage 2, expected expenditure has increased due to design finalization and rental levels. Despite this, the project remains an attractive capital deployment option.