Dexus Convenience Retail (DXC) H2 2026 earnings summary

Executive summary

• Achieved FY26 FFO and distributions of 20.9 cps, in line with guidance, with resilient income growth and high occupancy at 99.2%, supported by a 7.6-year WALE and high-quality tenant covenants.

• Portfolio comprises 91 assets valued at $779 million, focused on high-traffic metro and highway locations, with 77% weighted to the eastern seaboard and 86% of income expiring in FY31 or beyond.

• Portfolio quality improved through strategic asset recycling, development completions, and a focus on value-accretive opportunities such as buybacks and developments.

• Sustainability initiatives maintained net zero Scope 1 and 2 emissions and 100% renewable electricity across the managed portfolio.

• Strong capital position with gearing at 30.6%, active buy-back program increased to 5%, and no significant lease expiries until 2032+.

Financial highlights

• FFO and distributions delivered at 20.9 cps (AUD 0.209 per security), up 1.2% year-over-year, with a 100% payout ratio and net profit after tax rising to $56.4 million from $39.4 million.

• Like-for-like income growth of 3%, supported by contracted rental escalators and average rent reviews of 3.3%.

• NTA per security increased by 6% to $3.86, supported by a $27.4 million valuation uplift and portfolio improvements.

• Property portfolio valued at $779 million, with a 3.6% revaluation uplift and average cap rate of 6.18%.

• $8 million in asset divestments at a 1.4% premium to book value.

Outlook and guidance

• FY27 distributions expected to be maintained at 20.9 cps (AUD 0.209 per security), implying a 7.8% yield, with payout ratio temporarily at 103%-104% and normalization anticipated as income growth is delivered.

• Updated distribution policy targets a payout ratio of 95-110% of FFO, providing flexibility in a higher interest rate environment.

• Focus remains on executing the on-market buyback, selective development opportunities, and enhancing portfolio quality.

• Portfolio positioned for defensive income with contracted rental growth and minimal near-term expiries.

• Securities trading at a 30.8% discount to NTA.