Dexus Industria REIT lifts FY2026 FFO forecast on stronger outlook

Dexus Industria REIT on Thursday lifted its funds from operations forecast for fiscal 2026, citing sustained demand and improved leasing momentum across its Australian industrial property portfolio.

The trust now expects FY2026 FFO to grow between 1% and 3%, up from its prior guidance of flat to 2% growth. The upward revision reflects stronger-than-anticipated tenant demand and higher occupancy rates, particularly in Sydney and Melbourne, where industrial real estate remains in short supply.

Dexus Industria REIT reported that leasing activity in the first half of fiscal 2025 exceeded expectations, with new and renewed leases contributing to a 95% portfolio occupancy rate, compared with 93% at the same time last year. The trust attributed the improvement to structural tailwinds in e-commerce and logistics, which continue to drive demand for warehouse and distribution space.

Funds from operations, a key metric for REITs, rose 4% year-over-year to A$112 million in the six months ended Dec. 31, 2024, supported by higher rental income and lower vacancy-related costs. The trust maintained its interim distribution of A$0.08 per unit, in line with market expectations.

Management highlighted ongoing supply constraints in Australia’s industrial property market, which have limited new development completions and tightened vacancy rates. While construction costs remain elevated, Dexus Industria REIT expects further rental growth as supply-demand imbalances persist.

"The industrial sector continues to benefit from structural shifts in supply chains and consumer behavior," said Dexus Industria REIT Chief Executive Officer Ross Israel. "We are well-positioned to capitalize on these trends with a high-quality, strategically located portfolio."

The trust’s shares were trading 1.2% higher at A$3.45 in early afternoon trading on Thursday, outperforming the broader S&P/ASX 200 index.