Dexus Convenience Retail (DXC) H2 2024 earnings summary

Executive summary

• Delivered FFO and distributions of 21.0 cents per security at the upper end of guidance, supported by resilient income, 99.7% occupancy, and high-quality tenant covenants.

• Executed AUD 23–23.3 million in divestments, maintaining gearing at 32.9%, within the 25%-40% target range.

• Portfolio valued at $741 million, weighted to metro, highway, and eastern seaboard locations, supporting long-term demand from fuel-reliant vehicles.

• Enhanced portfolio through redevelopment projects and sustainability initiatives, including EV charging and solar PV rollout.

• Post-balance date, exchanged contracts to sell two assets for AUD 5.9 million at a 2.4% premium to June book values, with further asset sales under negotiation.

Financial highlights

• FY24 property FFO was $45.2m, down 3.9% year-over-year; FFO per security was 21.0 cents, down 2.9%.

• Achieved FFO at the top end of guidance, though impacted by higher interest expenses.

• NTA per security decreased 5.1% to AUD 3.56, mainly due to asset valuation declines.

• Property valuations decreased $23.7m or 3.1% over 12 months, with average cap rate expanding to 6.4%.

• Net profit after tax was $3.4m, up from a $8.4m loss in FY23, reflecting lower property devaluations.

Outlook and guidance

• FY25 FFO and distributions forecast at 20.6 cents per security, reflecting dilution from AUD 40 million in asset sales and assuming contracted income growth and current interest rates.

• Guidance implies a distribution yield of 7.3% or higher, with strong income visibility.

• Like-for-like income growth expected to be offset by higher interest expense; main decline due to full-year impact of asset sales.

• Focus remains on defensive income, prudent capital structure, and capital redeployment into high-return opportunities.

• Floating rate for debt assumed in the mid-4% range for FY 2025.