Dexus Convenience Retail (DXC) H2 2024 earnings summary

Executive summary

• FY24 FFO and distributions reached 21.0 cents per security, at the upper end of guidance, reflecting income resilience and active capital management despite higher interest rates.

• Maintained high occupancy at 99.7% and a long WALE of 8.8 years, with a diversified tenant base and strong lease expiry profile.

• Executed $23.3 million in divestments, maintaining gearing at 32.9% within the 25%-40% target range, and exchanged contracts post-balance date for two assets at a 2.4% premium to book value.

• Enhanced portfolio through redevelopment projects, sustainability initiatives, and value-add opportunities, supporting long-term growth.

• Portfolio is weighted towards metro and highway locations, supporting long-term demand from fuel-reliant vehicles.

Financial highlights

• FY24 FFO was $28.9 million, down 2.9% year-over-year, with distributions matching FFO at 21.0 cents per security.

• NTA per security decreased 5.1% to $3.56, mainly due to a 3.1% decline in asset valuations.

• Net profit after tax was $3.4 million, rebounding from a loss of $8.4 million in FY23.

• Like-for-like net property income grew 2.8% year-over-year, supported by average rent reviews of 3.4%.

• Gearing to decline further with recent and pending asset sales.

Outlook and guidance

• FY25 FFO and distributions per security expected at 20.6 cents, reflecting dilution from up to $40 million in asset sales and current interest rates.

• Guidance implies a distribution yield of 7.3%, with strong income visibility and defensive portfolio positioning.

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

• Floating rate for debt assumed in the mid-4% range for FY25.

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