Dexus Convenience Retail REIT has reported solid half-year results for 2026, underpinned by resilient income growth and a $19.8 million uplift in portfolio valuation. The fund maintains a conservative capital structure while advancing key development projects.
- 2.9% like-for-like income growth and 3.1% average rent review
- Portfolio valuation increased by $19.8 million due to cap rate compression and contracted rent growth
- 99.9% occupancy with a weighted average lease expiry (WALE) of 7.6 years
- Conservative gearing at 29.8%, within target range of 25-40%
- Progress on Glass House Mountains redevelopment and strategic acquisitions to enhance portfolio quality
Strong Financial Performance and Portfolio Resilience
Dexus Convenience Retail REIT (ASX – DXC) has delivered a robust set of half-year results for 2026, demonstrating resilience in income and portfolio value despite a challenging interest rate environment. The fund reported a 2.9% like-for-like income growth and achieved an average rent review increase of 3.1%, maintaining an exceptionally high occupancy rate of 99.9%. These metrics underpin the fund’s defensive income profile and long-term income security.
The portfolio, valued at approximately $760 million as of 31 December 2025, saw a $19.8 million uplift in net tangible assets (NTA). This increase was driven by a combination of contracted rent growth and a tightening of capitalisation rates, reflecting strong demand in the direct property market for high-quality convenience retail assets.
Strategic Development and Acquisition Pipeline
DXC continues to enhance its portfolio quality through targeted acquisitions and value-accretive developments. Notably, the staged opening of the Glass House Mountains Northbound redevelopment is progressing well, with key quick-service restaurant tenants now trading and sustainability features such as EV charging bays and water reuse systems integrated into the project. The Southbound redevelopment is advancing with tenant negotiations and design refinements underway.
The fund has agreed to acquire approximately $35 million in fund-through developments, restocking its development pipeline with assets focused on metro and highway convenience retail locations. These projects are expected to deliver internal rates of return comfortably above DXC’s cost of capital, further supporting the fund’s growth strategy.
Conservative Capital Management and Market Positioning
Maintaining a conservative capital structure remains a priority, with gearing at 29.8%, comfortably within the target range of 25-40%. The fund benefits from a staggered debt maturity profile with no expiries until fiscal year 2028 and a high proportion of hedged debt, which mitigates interest rate risks. This strong balance sheet position enables DXC to fund its development pipeline and pursue selective acquisitions.
DXC’s portfolio is predominantly weighted to Australia’s eastern seaboard, with 77% of assets located in metro and highway corridors that benefit from high traffic volumes and strong convenience retail demand. The fund’s tenant mix includes leading national and international convenience retailers, with embedded rent escalators providing ongoing income growth.
Sustainability Initiatives and Future Outlook
Aligned with Dexus’s broader sustainability strategy, DXC has embedded environmental initiatives within its developments, including rooftop solar, EV charging infrastructure, and water conservation measures. The fund has maintained a net zero emissions position across its controlled operations for the half year, reflecting its commitment to sustainable asset management.
Trading at a circa 29% discount to NTA and offering a distribution yield of 7.7%, DXC reaffirms its full-year guidance for 2026, targeting funds from operations (FFO) and distributions growth of approximately 1.2%. The fund’s focus on enhancing portfolio quality, expanding convenience retail exposure, and disciplined capital management positions it well for stable income delivery and long-term value creation.
Bottom Line?
DXC’s disciplined growth and sustainability focus set the stage for continued resilience amid evolving market conditions.
Questions in the middle?
- How will rising interest rates impact DXC’s development pipeline and acquisition strategy?
- What tenant pre-commitment progress can investors expect on the Glass House Mountains Southbound project?
- How might the shift towards electric vehicles influence DXC’s convenience retail asset demand and sustainability initiatives?