The ASX dividend stock Dexus Industria REIT (ASX: DXI) looks like an excellent investment in the current economic conditions.
This business is a real estate investment trust (REIT) that owns high-quality industrial warehouses. At 30 June 2025, the business' property portfolio was valued at $1.5 billion. It aims to provide sustainable income and good capital growth prospects for investors over the long-term.
The Dexus Industria REIT unit price has declined by approximately 20% since September 2021. Following its FY25 result and the recent economic changes in Australia, I think this could be a good time to invest for passive income.
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Good portfolio tailwinds
The business has positive tailwinds with its portfolio properties. Recently, it has deliberately reweighted its portfolio towards high-quality, well-located growth-oriented assets.
It explained in its FY25 result that industrial market conditions "remain favourable", supported by continued low vacancy across core markets.
Dexus Industria pointed to strong population growth, higher online penetration rates and a more supportive interest rate outlook that could support industrial activity and demand. But, high land and construction costs could mean supply of new industrial properties is expected to "remain moderate", supporting rental growth and occupancy levels.
Those tailwinds helped the ASX dividend stock deliver portfolio like-for-like income growth of 5.9% in FY25, helped by an average rental review of 3.5% and maintaining a high occupancy rate of 98.6%. I think that rental growth bodes well for future passive income growth.
Improving outlook for valuations
Now that RBA interest rate hikes have stopped and turned into interest rate cuts, the business is seeing increases in the value of its properties.
In the FY25 result, it reported a net valuation uplift of $37.6 million after all assets were independently valued, representing a 2.6% increase on their previously stated values in the prior year.
This helped the ASX dividend stock's net tangible assets (NTA) per security increase by 10 cents, or 3.1%, to $3.34.
Considering it's still trading at a large discount to its underlying value, I think the fact that its asset values are growing is appealing.
At the current Dexus Industria REIT unit price, it's trading at a 14% discount to NTA. With further potential rate cuts in the next 12 months by the RBA, I think this still represents a good time buy, despite already rising by 10% this year.
Passive income potential
In FY26, the business is expecting to grow its distribution per security by 1.2% to 16.6 cents. That translates into a distribution yield of approximately 5%, which is a strong starting point. I believe the distribution can grow in the coming years as its rental income increases and interest costs hopefully reduce.
