Company Interview / DXI resets for growth as profit slips but pipeline powers ahead

Key points:

Statutory net profit for Dexus Industria REIT drops 19% to $43.4 million Acquisition of Velocity Industrial Estate expected to deliver valuation upside $225 million development pipeline supports future growth, especially in PerthFull-year distribution guidance reaffirmed with a 6.6% yield

Jason Weate from Dexus Industria REIT (ASX:DXI) discusses the company's 19% drop in statutory net profit to $43.4 million for the half year, alongside a 2% decline in funds from operations to $28 million and a 5% fall in revenue to $32.9 million. Despite these figures, half-year distributions are delivered at 8.3 cents per security. Weate states that the decline is largely attributable to valuation slowdown and the strategic shift away from non-core, high-yielding assets to focus exclusively on industrial assets, representing a reset for the REIT’s earnings base. He also notes a small positive net valuation gain of about 1% across the portfolio.

Weate highlights Dexus Industria REIT's acquisition of full ownership of the $50 million Velocity Industrial Estate, asserting that the purchase price and cap rate are in line with the broader market, with confidence in leasing vacant units offering future upside. The REIT’s $1.4 billion diversified portfolio is underpinned by a $225 million development pipeline, particularly around Perth’s Jandakot Airport precinct, where rents have climbed 15% per annum on average over four years, supporting strong economic profitability.

Despite wider uncertainty due to potential rate hikes from the RBA, Weate expresses that Dexus Industria REIT’s operational metrics remain robust, with 99.7% occupancy and like-for-like income growth of 7.4%. Sustainability efforts, including solar and EV infrastructure, are increasingly integrated, and Weate confirms full-year distribution guidance, positioning the stock at a 6.6% distribution yield and a 25% discount to NTA.