Dexus Industria REIT Posts 5.9% Income Growth and $1.5bn Portfolio Value in FY25

Strong Financial Performance Amid Strategic Repositioning

Dexus Industria REIT (ASX, DXI) has delivered a solid set of full-year results for FY25, underscoring its commitment to a focused industrial real estate strategy. The REIT reported a 5.9% like-for-like income growth, buoyed by a high occupancy rate of 98.6% and an average rent review increase of 3.5%. These figures reflect the resilience of its portfolio and the effectiveness of active asset management.

The portfolio valuation reached $1.5 billion, supported by strong leasing activity and successful development completions at key sites such as ASCEND at Jandakot in Western Australia and Moorebank in New South Wales. The pace of capitalisation rate expansion has notably slowed, providing a more stable valuation environment for industrial assets.

Portfolio Repositioning and Capital Management

DXI has strategically reweighted its portfolio to comprise 100% industrial assets, up from 69% in FY22. This transition was facilitated by the acquisition of a 10,000 sqm warehouse at 32 Cox Place, Glendenning, NSW, for $40 million, and the expected divestment of Brisbane Technology Park in Queensland for $155.5 million. The Glendenning asset offers significant refurbishment upside and is situated in a land-constrained, high-demand urban industrial precinct, enhancing the REIT's exposure to Sydney's growth corridors.

Capital discipline remains a priority, with look-through gearing at 29.0%, slightly below the target range of 30-40%. This conservative leverage position provides balance sheet flexibility to fund the committed development pipeline and pursue accretive growth opportunities.

Development Pipeline and Sustainability Initiatives

The REIT’s development pipeline stands at approximately $230 million, with committed projects at ASCEND at Jandakot outperforming target yields on cost of 6.25%. These developments are largely pre-leased, reducing leasing risk and enhancing future income streams. Notably, the pipeline includes high-quality, modern warehouses designed with sustainability in mind, featuring solar installations, energy-efficient lighting, and water conservation measures.

DXI continues to align with Dexus’s broader sustainability strategy, maintaining a carbon-neutral position across controlled operations and integrating climate action initiatives within new developments. The REIT’s tenant base is diversified across sectors such as wholesale trade, logistics, and manufacturing, underpinning resilient cash flows and mitigating concentration risk.

Outlook and Market Positioning

Looking ahead, DXI has provided FY26 guidance anticipating funds from operations (FFO) of 17.3 cents per security and distributions of 16.6 cents per security, assuming no unforeseen circumstances. The REIT is currently trading at a circa 14% discount to net tangible assets (NTA) and offers a distribution yield of approximately 5.8%, presenting a compelling value proposition given its strong fundamentals and growth prospects.

Market fundamentals for Australian industrial real estate remain robust, supported by structural tailwinds such as population growth, e-commerce expansion, and constrained new supply due to development delays and cost pressures. DXI’s strategic focus on well-located, high-quality industrial assets positions it well to capitalise on these trends.