Dexus Industria REIT (ASX: DXI) announces FY22 results

• Portfolio increased from 39 properties to 94
• Statutory net profit of $169.4 million
• $100.3 million in valuations gains recorded

Dexus Industria REIT (ASX: DXI) has announced its FY22 results, with the company confirming a distribution of 17.3 cents per security.

Among the company’s highlights, DXI announced record leasing activity, with 70,600 square metres completed, as well as 20,000 square metres of development leasing.

DXI’s portfolio also saw $100.3 million in valuation gains, contributing to.a 40 cent or 12.5% uplift in the net tangible assets per security to $3.60.

“This is another strong set of results, with net profit of $169.4 million being a record and FFO at the top of the guidance range, driven by contributions from acquisitions and 5.1% like-for-like growth across our industrial assets,” said DXI fund manager Alex Abell.

“Acquisitions during the period, including the 33.3% stake in Jandakot Airport industrial precinct – which has 53 assets with an average age of 6 years, and 80 hectares of development land, also improved the portfolio quality and enhanced the growth profile over the medium term.”

Source: Dexus Industria REIT.

Dexus Industria REIT’s $170 million profit is a 42 per cent increase on FY21, DXI said the increase was primarily driven by valuation gains on investment properties on a look-through basis of $100.3 million, which were $22 million higher than the prior year.

DXI’s FFO guidance for the year was 18.1 cents per security to 18.5 cents per security, with the company achieving at the top of that guidance range.

FFO per security was down 7.2%, the company said this was largely due to anticipated timing delays between the $350 million equity raising launched in September 2021 and capital deployment relating to acquisitions, as well as the departure of a major tenant at Rhodes Corporate Park in September 2021. FFO increased almost 30 per cent to $53.6 million.

All investment properties were independently valued in the 12 months to 30 June 2022. The uplift above prior book values was 10.2 per cent on a like-for-like basis, largely driven by industrial assets in Victoria and NSW increasing by 16.6 per cent and 15.2 per cent on average respectively. Valuation gains were the primary driver of a 40 cent (12.5 per cent) uplift in NTA per security to $3.60.

Gearing was 28.9 per cent, compared to the target band of 30 – 40 per cent. The weighted average cost of debt was 2.4 per cent, and the weighted average debt facility maturity increased to 3.5 years after securing $176 million of new facilities and extending $244 million of existing facilities.

The nearest debt maturity is $30 million in December 2023 with 71 per cent of debt hedged in FY22 and a weighted average hedge maturity of 2.4years.

Dexus Industrial REIT more than doubled its portfolio size, DXI’s portfolio grew from 39 properties valued at $1.1 billion to 94 properties valued at $1.7 billion.

DXI acquired 57 assets during the year totalling $622 million. The assets were acquired at an average yield of 5.1 per cent and a weighted average lease expiry of 7.4 years. Two assets were divested during the year at an average premium to book value of 19%.

Key industrial leasing activity included 22,900 square metres at 16-28 Quarry Road, Stapylton QLD and 17,000 square metres at 89 West Park Drive, Derrimut VIC. Almost 4,000 sqm (3,800 square metres) was leased at Rhodes Corporate Park, including 2,100 square metres to Booktopia at Building A, while 5,700 square metres was agreed at Brisbane Technology Park.

The weighted average capitalisation rate for the portfolio is 5.0 per cent and the weighted average lease expiry by income is 5.6 years. 93 per cent of portfolio income grows at contracted rent reviews of 3% or more, with 39 per cent of the portfolio linked to CPI rental escalations. Total occupancy remained strong at 96.2 per cent.

Post acquisitions during the year, the total development pipeline was $378 million, of which $128million is committed with $82 million spend remaining. At Jandakot Airport industrial precent, 4,800 square metres were completed during the year and is fully leased to Canon Foods.

DXI provided an FY23 guidance for FFO of 16.7 to 17.5 cents per security and distributions of 16.4 cents per security, based on current interest rate expectations and barring unforeseen circumstances.