Full Year 2026 Dexus Earnings Call Transcript
Key Points
- Dexus (DEXSF) delivered solid FY26 results, meeting commitments with total AFFO of $484 million and a distribution of $0.37 per security, reflecting a payout ratio of 82%.
- Office portfolio occupancy improved significantly to 95.7%, the strongest since June 2023, with leasing volumes up 60% year-over-year.
- Industrial portfolio achieved a strong one-year total return of 7%, with releasing spreads of 24% and 68% of the committed development book pre-leased.
- Funds management raised $2 billion in equity, doubled from last year, and fully resolved the DWPF redemption queue post year-end.
- Balance sheet remains solid with look-through gearing at 33.4%, expected to reduce by 1.5 percentage points after divestments, supporting recommencement of buyback activity.
- Portfolio valuations stabilized, with overall portfolio value increasing by 1%, driven by market rent growth, and industrial assets up 2.3%.
- FY27 earnings are expected to be lower, with AFFO guidance of $0.375-$0.395 per security, due to minimal performance fees, trading profits, and higher financing costs.
- Waterfront Brisbane project faces further delays, with completion now expected in late 2029, increasing costs and impacting cost to complete.
- APAC litigation remains a significant overhang, with legal costs of approximately $60 million expensed and potential future claims not provisioned.
- Infrastructure funds and mandates from AMP are under review, with expectations of materially lower earnings contribution from these funds.
- Office like-for-like income growth was only 30 basis points, impacted by downtime at key vacancies, and effective leasing spreads remain negative at -8.7%.
- Industrial occupancy by income decreased to 94.6%, with incentives increasing to 21% due to supply-driven competition in select sub-markets.
Thank you for standing by and welcome to the Dexus FY26 results briefing. (Operator Instructions)
I would now like to hand the conference over to Ross Du Vernet, Group CEO and Managing Director. Please go ahead.
Well, good morning, everyone. We really appreciate you taking the time to dial in this morning. I know it's a really busy day with other companies reporting, and there's probably a few tired analysts given it's been a busy reporting week.
Let's begin today by acknowledging the Traditional Custodians of the lands and waterways on which we operate and pay our respects to Elders, past and present.
Today, you'll hear from some of the management team who will provide you with a full picture of the business and the operating environment. You'll hear from Keir, our CFO on the financials; Andy on Office; Chris on Industrial; and Michael on Funds Management. At the conclusion, I'll provide a summary and outlook, and then we'll open up for
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