Dexus Industria REIT Posts 7.4% Income Growth, Upgrades FY26 FFO Guidance

Strong Operational Momentum

Dexus Industria REIT (ASX, DXI) has delivered a solid performance in the first half of 2026, underpinned by a 7.4% like-for-like income growth and an impressive 99.7% occupancy rate across its $1.4 billion industrial property portfolio. These results reflect the REIT’s strategic focus on well-located, high-quality warehouses in major Australian cities, which continue to attract strong tenant demand.

The REIT’s weighted average lease expiry (WALE) remains healthy at 5.3 years, supporting income stability and visibility. Contracted rent reviews averaged 3.3% in the half, contributing to organic income growth and underpinning the slight upgrade in full-year funds from operations (FFO) guidance to 17.4 cents per security, alongside reaffirmed distribution guidance of 16.6 cents per security.

Active Capital Recycling and Strategic Acquisitions

DXI has continued to optimise its portfolio through capital recycling, notably completing the divestment of Brisbane Technology Park for $155 million in late 2025. Proceeds from this sale have been redeployed into four acquisitions across Sydney and Melbourne’s supply-constrained industrial markets, including the full acquisition of a Moorebank asset for $49.6 million, increasing Sydney exposure from 6% to 10% of the portfolio.

These acquisitions are positioned for value enhancement through active asset management and leasing upside, reflecting DXI’s strategy to invest in urban infill locations with strong growth prospects. The portfolio is now diversified across key states, with Victoria and New South Wales comprising over half the portfolio value.

Development Pipeline Driving Future Growth

DXI’s $225 million development pipeline, primarily centred on the ASCEND precinct at Jandakot, Western Australia, remains a key growth driver. With 77% of committed developments pre-leased, the pipeline is on track to deliver an average yield on cost of 6.6%, exceeding the 6.25% target. Recent completions have achieved yields above 6%, demonstrating the strength of development economics despite broader market challenges.

The pipeline includes a mix of speculative and pre-committed projects, with a total of approximately 241,000 square metres planned through to 2030. This development momentum supports DXI’s long-term income growth and capital appreciation objectives.

Balance Sheet Strength and Sustainability Focus

DXI’s balance sheet remains robust, with look-through gearing reduced to 26.2%, comfortably below the target range of 30-40%. The REIT has extended its debt maturity profile to an average of 3.8 years, with no maturities until December 2027, and refinanced approximately $150 million of facilities at competitive rates, enhancing financial flexibility.

On the sustainability front, DXI continues to embed environmental initiatives, including solar installations and circularity in developments, aligning with Dexus’s broader sustainability strategy. These efforts not only reduce environmental impact but also enhance asset resilience and tenant appeal.

Outlook

With strong leasing activity, a disciplined capital management approach, and a well-progressed development pipeline, DXI is well positioned to deliver secure income growth and capital returns. The REIT currently trades at a circa 25.7% discount to net tangible assets, offering an attractive distribution yield of 6.6% based on the latest security price.