Dexus Retail REIT posts $8.4m loss

Dexus Convenience Retail REIT has recorded a statutory net loss after tax of $8.4 million for the year ended 30 June, which was impacted by $41.3 million of asset devaluations reflecting a 5% decline on prior book values.

In the announcement to the Australian Securities Exchange (ASX), Dexus said that a net loss compared to the prior year’s net profit after tax of $82.6 million as its valuations gains stood at $30.8 million in the prior year.

The trust had 82 of its 105 investment properties independently valued during a year, with a remainder subject to internal valuations, and the combined external and internal valuations resulted in a 5% decrease on prior book values, which contributed to net tangible assets (NTA) per security decrease by 28 cents or 6.9%.

DXC fund manager, Jason Weate, said Dexus was continuing to pursue asset divestments to further strengthen its balance sheet and enhance positioning of the portfolio. However, according to the announcement, reported divestments have reduced gearing from 35% to 31.8% on a pro forma basis which stood below the mid-point of the target range of 25-40%.

DXC’s expanded divestment program saw execution of $52.3 million of disposals “at attractive pricing” for investors.

“This reflects a strong outcome in a subdued market, reducing pro forma gearing to below the midpoint of our target 25 to 40% target range and lowering exposure to floating rate debt, as well as improving overall portfolio quality with 42% of asset sales in regional locations,” Weate explained.

“We will continue to actively manage the portfolio and balance sheet to position the vehicle for long-term growth opportunities for security holders,” he added.

The portfolio consists of 85% weighted (by value) to metropolitan and highway assets, which benefit from higher levels of traffic flow and offer greater flexibility, with regional properties comprising the remainder.

As far as its outlook was concerned, DXC said it expected “continued relative valuation resilience for service station and convenience retail assets due to their predictable cash flows, strong tenant covenants and a weighted average cap rate that provides a positive spread against the marginal cost of debt”.

DXC also confirmed distribution of 21.6 cents per security as it delivered on its FY23 guidance, the firm said.