Dexus Faces Risks as It Maintains Distribution and Navigates Market Challenges
Dexus has announced its 18.0 cents per security distribution for the first half of 2025, alongside robust full-year results that highlight a resilient portfolio and disciplined capital management. The company signals confidence with a steady outlook despite ongoing economic uncertainty.
- 18.0 cents per security distribution paid for six months to June 2025
- FY25 adjusted funds from operations (AFFO) of $483.9 million, 45.0 cents per security
- Strong balance sheet with gearing at 31.7% and $3 billion liquidity
- High occupancy rates – 92.3% office, 96.2% industrial portfolios
- Development pipeline valued at $13.3 billion with significant leasing pre-commitments
Distribution Payment and Financial Highlights
Dexus (ASX – DXS) has confirmed the payment of an 18.0 cents per security distribution for the six months ended 30 June 2025, aligning with its updated distribution policy. This payment follows the release of its full-year results, which showed adjusted funds from operations (AFFO) of $483.9 million or 45.0 cents per security, in line with guidance. The company declared total distributions of 37.0 cents per security for FY25, reflecting a payout ratio of 82.2%, consistent with its strategic approach to balancing income return and capital growth.
Portfolio Resilience and Capital Management
Despite a backdrop of economic uncertainty, Dexus demonstrated resilience through improved portfolio valuations in the second half of the year. The office portfolio maintained a strong occupancy rate of 92.3%, while the industrial portfolio held steady at 96.2%. Rent collections remained robust at 99.6%, underscoring tenant stability. The company’s disciplined capital management is evident in its gearing ratio of 31.7%, comfortably within its 30-40% target range, supported by $3 billion in cash and undrawn facilities. Debt maturity is well spread with a weighted average of 4.3 years, and 86% of debt was hedged at a low average interest rate of 2.1%, providing significant protection against rate volatility.
Funds Management and Development Pipeline
Dexus’s funds management business, overseeing $35.6 billion in assets, continues to outperform benchmarks, particularly through the Dexus Wholesale Property Fund and the Dexus Wholesale Shopping Fund. The sale of a 50% interest in Macquarie Centre was offset by the acquisition of Westfield Chermside, enhancing growth prospects. The company’s development pipeline stands at $13.3 billion, with $7.1 billion within the Dexus portfolio and $6.2 billion in third-party funds. Notably, 71% of office development leasing is pre-committed, reducing project risk. Industrial developments progressed well, with key projects like Horizon 3023 and ASCEND Industrial Estate achieving full or strong leasing commitments.
Sustainability and Strategic Outlook
Dexus continues to advance its sustainability agenda, maintaining net zero emissions across Scope 1, 2, and some Scope 3 emissions, and sourcing 100% renewable energy for its managed portfolio. The company improved its NABERS Indoor Environment rating to 5.6 stars and installed battery storage at key industrial assets. Partnerships with mental health organisations and community initiatives further reflect its commitment to social responsibility. Looking ahead, Dexus expects AFFO of 44.5 to 45.5 cents per security and distributions of 37.0 cents per security for FY26, signaling confidence in its strategy despite potential market headwinds.
Bottom Line?
Dexus’s steady distribution and robust FY25 results position it well for growth, but investors will watch closely for how economic uncertainties and asset sales shape the year ahead.
Questions in the middle?
- How will Dexus navigate potential market volatility impacting asset valuations and sales?
- What impact might ongoing litigation assumptions have on future earnings and distributions?
- Can Dexus sustain its strong leasing momentum amid evolving office and industrial market dynamics?
