Full Year 2026 Dexus Industria REIT Earnings Call Transcript
Key Points
- Delivered FFO of AUD 0.176 per security, above upgraded guidance, with distributions of AUD 0.166 per security.
- Strong leasing performance with re-leasing spreads of 21.4% and like-for-like income growth of 5.3%.
- Development pipeline at Jandakot achieved a yield on cost of 7%, above the 6.25% target, with 100% pre-leasing on completions.
- Maintained a strong balance sheet with look-through gearing of 31.2%, at the lower end of the target range, and executed a zero-cost hedge book restructure.
- Executed a securities buyback program upsized to 5%, with plans to complete it by March next year, and completed four acquisitions with strong leasing outcomes.
- FFO per security declined year-on-year due to a 60-basis-point rise in cost of debt and the sale of BTP.
- FY 2027 FFO guidance of AUD 0.17 per security is flat compared to FY 2026, impacted by the hedge book restructure and higher interest costs.
- The hedge book restructure will increase FY 2027 interest costs by approximately AUD 1.4 million or AUD 0.005 per security.
- Prudent lease-up assumptions for vacant units at Moorebank and Jandakot are expected to dampen like-for-like growth.
- Construction costs are forecast to rise, posing a risk to development yields, with some projects like 25 Centurion Place expected to yield below the 6.25% target.
I would now like to hand the conference over to Jason Weate, Fund Manager, DXI. Please go ahead.
Good morning. I am Jason Weate, Fund Manager of Dexus Industria REIT, and I am pleased to present DXI's FY 2026 result. I would like to begin by acknowledging the traditional custodians of the many lands on which we operate and pay our respects to elders, past and present. Today, I will cover the highlights, financial results, portfolio performance, and growth drivers before moving to Q and A. DXI provides investors with access to a diversified portfolio of 90 assets valued at AUD 1.5 billion, with 80% of the population within 60 minutes of our asset base, 77% located in infill markets, and a significant AUD 217 million development pipeline at ASCEND at Jandakot. DXI's investment proposition is to generate strong risk-adjusted returns built on three core pillars of secure and growing income, active portfolio management, and prudent capital structure.
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