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, supported by resilient income, 99.7% occupancy, and high-quality tenant covenants.

• Portfolio valued at $741 million, weighted to metro and highway locations on Australia's eastern seaboard, with 95% of income from major national and international tenants.

• Gearing managed at 32.9%, within the 25%-40% target range, supported by $23 million in FY24 divestments and prudent capital management.

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

• FY25 guidance set at FFO and distributions of 20.6 cents per security, with a 7.3% distribution yield based on current security price.

Financial highlights

• FY24 property FFO was $45.2m, down 3.9% year-over-year; FFO per security was 21.0 cents, down 2.9%, mainly due to higher interest expenses.

• Net profit after tax was $3.4m, reversing a prior year loss of $8.4m, reflecting lower property devaluations.

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

• Portfolio revaluations resulted in a $23.7m decrease, with average cap rate expanding to 6.4%.

• 100% FFO payout ratio maintained; distributions per security matched FFO at 21.0 cents.

Outlook and guidance

• FY25 FFO and distributions forecast at 20.6 cents per security, assuming contracted income growth, current interest rates, and up to $40 million in asset sales.

• 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.

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

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