Dexus reports $752.7m statutory loss

Oksana Patron

17 August 2023

Unrealised fair valuation losses on investment property in FY23 have led to $752.7 million in statutory net loss after tax compared to $1.6 billion in net profit after tax in FY22 for Dexus which has reported its financial results for 12 months to 30 June.

In the announcement made to the ASX, the firm said that this movement was driven by $1,183.9 million of fair valuations losses on the back of capitalisation rates softening across the portfolio, compared to $926 million of fair valuation gains in the prior year.

These revaluation losses primarily drove the 11.4% decrease in net tangible asset (NTA) backing per security during the year to $10.88 at 30 June 2023.

Additionally, the AMP Capital platform acquisition impacted NTA per security by 26 cents as a result of transaction costs incurred and management rights and goodwill which are classified as intangible assets.

During the reporting period, Dexus managed to achieve first completion of the acquisition of AMP Capital’s domestic real estate and infrastructure equity business in March 2023, which included 430 employees, as well as assets and a number of systems being successfully integrated onto the Dexus platform.

Dexus Chief Executive Officer, Darren Steinberg said that this transaction positioned Dexus as a leading Australasian real asset manager of scale with $61 billion of funds under management and new capabilities in infrastructure.

“Operating in an uncertain economic environment remains challenging. In this environment we have continued to diversify our capital sources, and grow and diversify our funds management business, while we re-weight the Dexus portfolio. We have announced $1.8 billion of balance sheet divestments since the FY22 result, maintaining a strong balance sheet and enabling us to recycle capital into higher returning opportunities,” he commented on the results.

Dexus manages $43.6 billion of funds across its diversified funds management business.

As far as its office portfolio is concerned, Dexus manages a high-quality $24.3 billion group office portfolio ($12.3 billion of which sits in the Dexus portfolio), the firm said.

Executive General Manager, Funds Management, Deborah Coakley announced that during a reporting period, the firm continued to execute on its strategic initiatives and further diversify its funds management business, ‘providing new avenues’ to create value.

“We successfully raised $1.6 billion4 in new equity across the platform, including for our opportunity and healthcare strategies as well as a newly established Wholesale Airport Fund.

“In January this year, we opened a Singapore office to support the growth in Dexus’s funds business and our expanding relationships across the region, capitalising on the attractiveness of Australasian real asset investments to international capital partners,” she said.

Discussing the outlook, Steinberg stressed that FY24 would “remain challenging period” due to capital flows and market sentiment believed to continue to be impacted by inflation, higher interest rates and geopolitical risks.

“This environment is expected to put further pressure on the valuations of real assets,” he added.

“Higher interest rates will continue to impact our result in FY24, along with the impact of cycling a relatively strong year of trading profits in FY23. Barring unforeseen circumstances, for the 12 months ended 30 June 202415 Dexus expects distributions of circa 48.0 cents per security, below the 51.6 cents per security delivered in FY23 predominantly driven by lower trading profits.

“Despite the challenges, we have continued to execute on our strategy, diversifying our capital sources, growing our funds business, re-weighting the Dexus portfolio and commencing next generation developments.”