Dexus Convenience Retail REIT, which owns an $800 million portfolio of service stations, is on track to deliver its upgraded full-year guidance of a 5.5 per cent rise in distributions, boosted in part by a run of acquisitions during its 2022 first half.
The listed property trust has been rebadged since ASX-listed Dexus took control of the fund after buying out Melbourne-based fund manager APN Property in a $320 million deal last year.
Led by Chris Brockett, the fund added another six properties, worth $73.7 million, to its service station-focused portfolio, which now holds 112 assets worth $803 million. The portfolio, which is buffered by the convenience retail outlets at the petrol stations, has proven resilient, with a 2.7 per cent rise in values over the interim period.
The fund has confirmed its upgraded full-year guidance for funds from operations, the industry earnings standard, and distributions of 23.1¢ per security, representing a 5.5 per cent increase on its 2021 result.
Statutory net profit hit $40 million, up 90 per cent on the previous corresponding period, primarily driven by valuation gains on investment properties.
“The portfolio’s concentration in quality non-discretionary retail assets underpinned like-for-like net operating income growth of 2.3 per cent, in addition to valuation uplifts and NTA [net tangible assets] per security growth,” Mr Brockett said.
Investors embraced the news on Monday, and the stock closed 5¢, or 1.5 per cent, higher at $3.47, ahead of the broader market and its listed property peers.
Despite that enthusiasm, the fund is still trading at a significant discount to the value of its net tangible assets, rated at $3.83.
Mr Brockett said it was focused on tackling that trading performance gap through an on-market securities buyback program and by using its balance sheet “to take advantage of acquisition opportunities as they arise”.
“Our current portfolio is focused on service stations. However, our investment mandate includes the entire convenience retail landscape, which we are attracted to for its defensive qualities and secure underlying cash flows,” he said.