Dexus Industria REIT (ASX: DXI) has reported a net profit of $113.7 million for HY22, reflecting a 257 per cent jump compared to the same period last year ($31.9 million), which was primarily driven by $91 million in property valuation gains.
Leasing outcomes exceeded rent assumptions by an average of 15 per cent, while the acquisition of 55 industrial assets gives DXI an average passing yield of 5 per cent and WALE of 7.1 years.
Funds from operations also increased to $24.8 million, reflecting a jump of 25.5 per cent. However, FFO per security dipped by 5 per cent due to a $350 million equity raise launched in September last year, which was used to buy a 33.3 per cent interest in WA’s Jandakot Airport.
“The financial results for the first half of an active period of leasing and transactions, as well as the focus across the Dexus platform to generate outperformance for DXI securityholders,” DXI fund manager Alex Abell said.
“Key drivers of the result included 45,700 square metres of leasing; acquiring $584 million of industrial assets including a 33.3 per cent stake in 51 assets and 80 hectares of development land at Jandakot Airport, Perth; and raising $350 million of equity and additional debt to fund growth initiatives.”
“These acquisitions undertaken during the period will deliver transformational growth over the coming years. On completion of these acquisitions, the portfolio is 79 per cent weighted towards industrial and logistics assets, which continue to benefit from strong underlying industry fundamentals. We remain focused on delivering securityholder value over the long term and actively managing our assets, including the significant development projects at Jandakot Airport, WA and Kemps Creek, NSW.”
The development of Lot 2, 884-928 Mamre Road, Kemps Creek, NSW (owned 50 per cent by Dexus and 50 per cent by ADI) into a 90,000sqm warehousing and corporate office space remains on schedule for completion in early-2023.
Key leasing activity included the extension of leases at 89 West Park Drive, 140 Sharps Road and 5 Butler Boulevard. A total of 2,800sqm was leased at Rhodes Corporate Park, including 2,100sqm to Booktopia and at Building A while 3,000sqm was agreed at Brisbane Technology Park.
During the period DXI saw its portfolio grow from 39 properties valued at $1.10 billion to 93 properties valued at $1.78 billion.
Gearing was reported at 28.5 per cent, putting DXI in a position to support growth as it sits below the 30 to 40 per cent target band.
Tenant demand also remains strong across the industrial market, with 4.3 million square metres being taken up in 2021 – double the ten-year average.
DXI views this boost in activity as a “result of the transition from bricks and mortar to e-commerce accelerating” and believes it is “well placed to support” this growth as its assets can reach 80 per cent of the population in each capital city within 60 minutes.
Less than one per cent of income expires throughout the remainder of 2022, with leasing completed this period reduced to 11 per cent in FY23, down from 19 per cent as at 30 June 2021.
Shares in DXI are up by 1.24 per cent at $3.27 per share at 2.18pm AEDT.
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