This article is from the Australian Property Journal archive
DEXUS Convenience Retail REIT’s (ASX: DXC) portfolio dependence on fuel stations has paid off over HY22, with the resilient asset type providing positive results across the board.
Statutory net profit was at $40.0 million, up $18.9 million or 90% on the previous corresponding period. DXC attributed this gain largely to valuation gains on its investment properties.
FFO was at $15.4 million, an increase of 25.9% or $32 million, with this rise underpinned by a like-for-like net operating income growth of 2.3%, in addition to the impact of acquisitions throughout the period.
This reflected a FFO per security increase of 6.6% to 11.5 cents per security.
DXC posted a distribution of 11.5 cents per security, an increase of 4.6% compared to the pcp, reflecting a FFO payout ratio of 99.4%.
NTA per security was up 4.4% to $2.83 cps, after $21.1 million in property valuation gains. This also saw the WACR of the portfolio compress to 5.82%.
“Today’s results demonstrate that we continue to deliver on our strategy of providing investors with a defensive and growing income stream, as well as actively diversifying and enhancing the overall quality of the portfolio,” said Chris Brockett, fund manager of DXC.
During the half DXC made $73.7 of acquisitions across six facilities, for an average yield of 5.6%, a WALE of 10.5 years and average annual rent reviews at approximately 3%.
“We continue to maintain a disciplined approach to capital allocation, including adhering to strict investment criteria for potential acquisitions while remaining opportunistic regarding property sale opportunities and capital recycling,” added Brockett.
The fund’s portfolio was at the close of the half year weighted 83% towards metropolitan and highway assets, with the rest accounted for by regional assets.
Portfolio WACR compressed 20 basis points to 5.82%, with WALE by income at 11.5 years, with lease expiry limited through to FY30.
The fund’s portfolio also boasts an average rental growth of 3.0% per annum, with occupancy at 99.7%.
Across its 112 properties, property income is 90% derived from 10 major tenants, while approximately 10% of the portfolio is weighted to non-fuel assets.
With gearing at 32%, it remained within DXC’s target range of 25% to 40%, while weighted average debt maturity was at 2.5 years, with weighted average cost of debt at 2.7%.
The REIT also boasts sufficient capacity to continue to grow its portfolio, with headroom at $65.5 million, which is down from $74.3 million in the previous period.
DXC reaffirmed its FY22 distributions guidance to 23.1 cps, a 5.5% increase on FY21 distributions.
