Dexus has announced a 19.3 cents per security distribution for HY26, aligned with its updated payout policy, alongside robust financial results and a strategic 10% on-market buyback to address valuation gaps.
- 19.3 cents per security distribution for six months ended December 2025
- Adjusted funds from operations (AFFO) of $253.3 million, in line with guidance
- Statutory net profit after tax surged to $348.5 million driven by valuation gains
- Activated on-market buyback of up to 10% of securities to enhance capital efficiency
- Strong leasing activity and $11.5 billion development pipeline underpin growth outlook
Distribution Payment and Financial Highlights
Dexus (ASX: DXS) has confirmed the payment of a 19.3 cents per security distribution for the six months ending 31 December 2025, reflecting an 82% payout ratio consistent with its updated distribution policy. This payment follows the release of its HY26 results, which showed adjusted funds from operations (AFFO) of $253.3 million, or 23.6 cents per security, aligning with prior guidance.
The company’s statutory net profit after tax jumped significantly to $348.5 million, a stark contrast to the $10.3 million recorded in the prior corresponding period. This surge was largely driven by positive fair valuation gains, marking a turnaround from losses experienced in HY25.
Strategic Progress and Portfolio Resilience
Dexus highlighted progress on several strategic fronts, including advancing its $2 billion divestment target with $0.8 billion already secured, launching new fund series, and reducing redemption queues by approximately $1 billion. The company’s office portfolio occupancy remained stable at 92.2%, outperforming broader market averages, supported by strong leasing deals at key Sydney and Brisbane assets.
Industrial property performance was particularly robust, with occupancy rising to 97.0% following the leasing of 172,000 square metres across major cities. The funds management business also demonstrated strength, raising over $950 million in third-party equity and launching the Dexus Strategic Investment Trust with a 25% stake in Westfield Chermside, Brisbane.
Capital Management and Buyback Initiative
Capital discipline remains a priority, with Dexus maintaining a look-through gearing ratio of 33.9%, comfortably within its 30-40% target range. The group holds $2.5 billion in cash and undrawn facilities, and hedges 95% of its debt at a weighted average interest rate of 2.9%, providing protection against rate volatility.
In a notable move to address a sustained disconnect between its equity market valuation and underlying asset values, Dexus has activated an on-market securities buyback program of up to 10% of its securities. The buyback is expected to proceed at a measured pace, balancing capital discipline with ongoing asset sales and strategic initiatives.
Development Pipeline and Sustainability Focus
The company’s real estate development pipeline stands at $11.5 billion, with $6.3 billion within the Dexus portfolio and $5.2 billion managed through third-party funds. Key projects such as Waterfront Brisbane and Atlassian Central benefit from fixed-price contracts and strong leasing pre-commitments, mitigating development risks.
Dexus also continues to advance its sustainability agenda, maintaining net zero emissions across Scope 1 and 2, sourcing 100% renewable electricity, and expanding onsite solar capacity to over 12 MW. The company achieved a 5.5-star NABERS Indoor Environment rating across its office portfolio, underscoring its commitment to environmental and community outcomes.
Outlook
Looking ahead, Dexus reaffirmed its full-year guidance for AFFO of 44.5 to 45.5 cents per security and distributions of 37.0 cents per security for the year ending 30 June 2026. With positive valuation trends and recovering transaction markets, the company is focused on enhancing returns through increased third-party capital participation and disciplined capital management.
Bottom Line?
Dexus’s strategic buyback and robust pipeline set the stage for renewed investor confidence amid evolving market conditions.
Questions in the middle?
- How quickly will Dexus execute its 10% on-market buyback and at what price levels?
- What impact will ongoing asset divestments have on the company’s capital structure and growth prospects?
- How will Dexus balance third-party capital participation with maintaining control over its core portfolio?