Dexus Posts $253M AFFO, Doubles Leasing Volumes, Advances $2.2B Divestments

Strong Financial Turnaround

Dexus has delivered a robust half-year performance for the six months ending December 2025, reporting a statutory net profit after tax of $348.5 million, a dramatic improvement from just $10.3 million in the prior corresponding period. This surge was primarily driven by positive fair valuation gains across its property portfolio, marking the second consecutive period of valuation uplifts. Underlying funds from operations (AFFO) remained steady at $253.3 million, slightly above last year, supporting a distribution of 19.3 cents per security with an 82% payout ratio.

Leasing Momentum and Portfolio Quality

The company’s office portfolio occupancy held firm at 92.2%, outperforming the broader Australian market, while industrial occupancy rose to 97%. Leasing activity nearly doubled compared to the previous half, with 95,300 square metres secured, including significant pre-leasing at Waterfront Brisbane now 71% committed. Industrial income grew strongly by 8.7%, reflecting robust demand and rent growth potential given the portfolio remains materially under-rented. These trends underscore Dexus’s strategic focus on high-quality, well-located assets in core CBD precincts.

Capital Raising and Divestment Progress

Dexus successfully raised over $950 million in third-party equity across its funds, including commitments to DREP2 and the newly launched Dexus Strategic Investment Trust series. The platform also facilitated more than $280 million in secondary unit transactions. On the divestment front, the company progressed $2.2 billion in sales, including the notable divestment of 100 Mount Street, North Sydney, contributing to a $3.8 billion transaction volume across acquisitions and disposals. These moves are part of a broader strategy to enhance capital efficiency and fund future growth.

Strategic Initiatives and Market Outlook

Despite improving asset valuations and transaction volumes, Dexus highlighted a persistent disconnect between its equity market valuation and the intrinsic value of its assets. To address this, the company has activated an on-market buyback of up to 10% of its securities, aiming to support shareholder value while maintaining balance sheet discipline. Additionally, Dexus issued $500 million in subordinated notes to diversify funding sources, with attractive terms and credit agency equity credit. The development pipeline remains substantial at $11.5 billion, with key projects like Atlassian Central and Waterfront Brisbane progressing on schedule and de-risked by pre-commitments and fixed-price contracts.

Sustainability Leadership and Fund Performance

Dexus continues to advance its sustainability agenda, maintaining net zero emissions across Scope 1 and 2 and sourcing 100% renewable electricity for its managed portfolio. The company earned top-tier ESG ratings, ranking second among REIT peers globally. Its funds management platform remains a strong performer, with flagship funds outperforming benchmarks despite some ongoing fund-specific challenges. The platform’s diversified real asset investments and ongoing capital raising position Dexus well for long-term growth as market conditions stabilise.