In This Article:
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FFO (Funds From Operations): Achieved at the top end of guidance range, $0.208 to $0.211 per security.
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Distribution: Delivered at the upper end of guidance range, $0.208 to $0.211 per security.
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Gearing: Maintained around the midpoint of target range, 25% to 40%.
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NTA (Net Tangible Assets) per Security: Decreased 5.1% to $3.56.
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Property Valuations: Decreased 3.1% over the 12-month period.
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Average Cap Rate: Expanded to 6.4%.
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Debt Facilities: Extended $130 million at sharper pricing.
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FY25 Guidance: FFO and distributions per security expected to be $0.206.
Release Date: August 12, 2024
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 and distribution at the upper end of their guidance range, showcasing resilient income backed by high-quality tenant covenants.
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The company executed $23 million in divestments to support the fund's capital position, maintaining gearing around the midpoint of their target range.
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Post-balance date, contracts were exchanged to sell two assets at a premium to book values, reducing pro forma gearing by an additional 50 basis points.
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89% of the portfolio is zoned for high-value uses, providing flexibility for future redevelopment opportunities.
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The company maintains a carbon-neutral position across its controlled assets and actively engages with tenants on ESG initiatives, including solar and electric vehicle charging projects.
Negative Points
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NTA per security decreased by 5.1% to $3.56, primarily due to asset valuation declines.
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The Glass House Mountains project is delayed by six months, although it has no financial impact, it affects the timeline for potential returns.
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Property valuations decreased by 3.1% over the 12-month period, reflecting challenges in the current market environment.
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The company faces continued increases in interest expenses, impacting overall financial performance.
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FY25 guidance indicates a decrease in FFO and distributions per security due to dilution from asset sales.
Q & A Highlights
Q: Can you walk us through your guidance for the year ahead and its components? A: The guidance for FY25 considers like-for-like income growth offset by increased interest expenses, resulting in flat growth. The decline is mainly due to the full-period impact of asset sales in FY24 and an additional $40 million of sales under negotiation. - Jason Weate, Fund Manager
Q: What are your assumptions regarding the cost of debt for FY25? A: The floating rate is assumed to be in the mid-4s, considering the market curve and recent guidance, despite some market volatility. - Jason Weate, Fund Manager