Dexus Convenience Retail REIT Posts 4.4% NTA Growth and 99.9% Occupancy

Strong Financial Performance and Distribution Confidence

Dexus Convenience Retail REIT (ASX – DXC) has delivered a robust first half for FY26, announcing an interim distribution of 10.45 cents per security and reaffirming its full-year guidance of 20.9 cents per security. The fund manager, Pat De Maria, highlighted that Funds From Operations (FFO) rose modestly by 1.3% to 10.5 cents per security, supported by steady like-for-like income growth of 2.9% and a resilient portfolio occupancy rate of 99.9%. This performance underscores DXC’s ability to generate secure, predictable income streams from its convenience retail assets.

Portfolio Quality and Valuation Gains

DXC’s portfolio, valued at approximately $760 million, benefits from a weighted average lease expiry of 7.6 years and a strong tenant base comprising major national and international convenience retailers. The portfolio’s valuation increased by $19.8 million during the half, reflecting a 2.7% uplift driven by capitalisation rate compression and rental growth. This translated into a 4.4% increase in net tangible assets (NTA) to $3.80 per security, reinforcing the fund’s underlying asset quality and market confidence.

Strategic Development Pipeline Expansion

DXC is actively enhancing its portfolio through value-accretive development initiatives. The Glass House Mountains Northbound redevelopment is progressing well, with quick-service restaurant (QSR) tenants now trading and the site fully pre-leased on an average 18-year lease term. Completion is expected by June 2026. Additionally, the fund has exchanged conditional contracts to acquire two fund-through developments, one metro and one highway site, with a combined project cost of around $35 million. These acquisitions will further strengthen DXC’s exposure to high-quality convenience retail assets, although final lease agreements remain subject to conditions precedent.

Balance Sheet Strength and Sustainability Focus

Maintaining a conservative capital structure, DXC’s gearing sits at 29.8%, comfortably within its 25-40% target range, with no debt maturities until FY28. The fund has hedged approximately 71% of its debt, providing protection against interest rate volatility. On the sustainability front, DXC continues to lead with 100% renewable electricity usage and net zero Scope 1 and 2 emissions across its operations. The Glass House Mountains Northbound site features six licensed electric vehicle charging bays, with plans for expansion, reflecting the fund’s commitment to supporting tenant-led sustainability initiatives.

Outlook and Market Positioning

DXC remains well positioned to deliver defensive and growing income, leveraging its high-quality portfolio and disciplined capital management. The fund’s focus on enhancing portfolio attributes, preserving balance sheet flexibility, and pursuing value-enhancing developments aligns with its strategy to provide sustainable income and long-term growth. With a distribution yield of approximately 7.7%, DXC offers an attractive proposition for investors seeking exposure to resilient convenience retail assets amid evolving market conditions.