Australia’s real estate group Dexus reported a 1% rise in portfolio valuation for the year to June 30, but its shares slipped 2.5% to AUD 5.655 after management trimmed guidance for adjusted funds from operations (AFFO) in the fiscal year ending June 2027.
The company now expects AFFO of AUD 0.375 to AUD 0.395 per security, down from the current AUD 0.37 per security. Dexus maintained its distribution target at AUD 0.37 per security for FY2027, with a payout ratio of 82%.
Group CEO Ross Du Vernet said underlying business performance remained flat despite the headline earnings reduction, attributing the decline to higher development expenditure and legal costs tied to APAC litigation. Total legal provisions for APAC matters now stand at approximately AUD 60 million, including costs already incurred and appeal expenses. A court appeal is scheduled for October.
Dexus reported AFFO of AUD 484 million for FY2026, with a distribution of AUD 0.37 per security. Corporate costs fell 6% year-over-year, extending a reduction of more than AUD 30 million since FY2024. The group’s look-through gearing stood at 33.4% as of June 30, expected to decline by about 1.5 percentage points following planned divestments.
Development activity remains active, with AUD 490 million in committed spend over the next 12 months. The company’s weighted average debt maturity is 4.2 years, with 91% of debt hedged at an average rate of 3%. Debt headroom totals AUD 2.5 billion, and the debt-to-equity ratio is 0.47.
Operational metrics showed improvement in office occupancy, rising to 95.7% from 92.3% a year earlier, the highest level since June 2023. Office leasing volumes reached 172,000 square meters, up 60% year-over-year, while industrial leasing activity totaled nearly 500,000 square meters, the second-largest year on record. Industrial re-leasing spreads stood at 24%.
Management outlined plans to release more than AUD 2 billion in capital over the next two years through divestments and third-party capital partnerships. A buyback program is expected to restart in the coming weeks, subject to market conditions. Dexus also confirmed it has maintained consecutive dividend payments for 23 years.
Key projects remain on track, including Atlassian Central, which topped out in June and is set for practical completion in late 2026, fully pre-leased for 15 years with fixed 4% annual increases. Waterfront Brisbane, however, has been delayed to a practical completion target of late 2029.
Dexus’s market capitalization stands at AUD 4.3 billion, with a dividend yield of 6.38% and a P/E ratio of 11.82. The stock’s 52-week range is between AUD 5.30 and AUD 7.73.
