Dexus (ASX: DXS) reported flat adjusted funds from operations of $483.9 million for the fiscal year ended June 2026, while maintaining its distribution at 37.0 cents per security. The result masked a weaker outlook for FY27, where management guided adjusted funds from operations to $0.375–$0.395 per security, down from $0.450 in FY26.
The industrial property specialist attributed the FY26 stability to a 9.9% rise in industrial property funds from operations to $140.4 million, offsetting a 5.6% decline in office property funds from operations to $517.5 million. Co-investments in pooled funds increased 16.1% to $79.5 million, while management operations fell 17.4% to $128.0 million. Performance fees totaled $37.4 million, compared with $40.8 million in FY25.
Total funds under management reached $51.4 billion, with office assets accounting for $20.2 billion, industrial properties $10.6 billion, retail properties $10.0 billion, and growth markets—including healthcare and alternatives—$10.3 billion. Third-party funds under management rose to $36.1 billion, nearly 2.4 times the $15.3 billion investment portfolio, while third-party equity raised nearly doubled to $2.0 billion.
Portfolio metrics showed office income occupancy at 95.7%, exceeding the 85.1% Australian CBD vacancy average. Industrial leasing volumes approached 500,000 square meters, with like-for-like income growth of 8.3% and re-leasing spreads of 24%. Property valuations stabilized, rising 1.0% overall, with office assets up 0.6% and industrial assets up 2.3%. Rent collections remained robust at 99.7%.
Dexus executed $1.9 billion in divestments during FY26, bringing total divestments to $2.5 billion since FY24, exceeding the $2 billion target for FY25–FY27. Major projects included Atlassian Central on track for late 2026 completion, while Waterfront Brisbane’s completion was pushed to late 2029 with pre-leasing at 71%. The DREP2 fund closed at $870 million, surpassing its $600 million target.
Legal and strategic challenges weighed on the outlook. In May 2026, the NSW Supreme Court ruled against the Dexus Bloc in a dispute over the sale process of APAC, owner of Melbourne and Launceston airports, with an appeal hearing set for October 2026. Dexus also initiated a review of its $7.3 billion infrastructure platform, which includes $260 million in co-investment interests and $35 million in management fee revenues.
CEO Ross Du Vernet noted that FY27’s lower headline earnings reflected one-time items and the full-year impact of major project completions, adding that the underlying business remained stable. The company’s balance sheet showed a look-through gearing of 33.4%, a debt-to-equity ratio of 0.47, and $2.5 billion in debt headroom.
