Dexus Income Jumps 31% as Asset Valuations Bounce Back

Australia’s Dexus Group posted a net profit of A$348.5 million ($246.5 million) for the six months to the end of December, up strongly from A$10.3 million in the year-earlier period, as asset valuations in the commercial property giant’s portfolio turned positive.

Despite a 17 percent year-on-year dip in six-month revenue to A$360 million, total income climbed 31 percent to A$735.2 million when accounting for the fair value gains of investment properties, ASX-listed Dexus said in results released Wednesday.

Property portfolio valuations resulted in a 1 percent rise on prior book values, with office valuations up 0.7 percent and industrial valuations up 1.6 percent. After recording fair value losses in the year-earlier half, Dexus enjoyed a second straight six-month period of portfolio valuation uplift, said managing director and CEO Ross Du Vernet.

“Underlying real asset markets are past the point of inflection and continue to improve, supported by positive business confidence, constrained supply pipelines, stabilisation in asset prices and improvement in transaction volumes, notwithstanding the evolving interest rate environment,” Du Vernet said.

Robust Office Leasing

Dexus said office leasing volume in the six-month period reached 95,300 square metres, nearly doubling the year-ago reading, while occupancy stood at 92.2 percent to outperform the broader Australian market.

Industrial like-for-like income grew 8.7 percent, supported by higher occupancy and strong leasing outcomes, with portfolio occupancy rising to 97 percent.

Dexus agreed or settled A$800 million in balance sheet divestments, including the agreed sale of 100 Mount Street in North Sydney, as it continued to work towards its A$2 billion divestment target through fiscal 2027.

Across its funds platform, the group raised over A$950 million of third-party equity and facilitated more than A$280 million of secondary unit transactions during the period.

“We are actively exploring opportunities to enhance returns and capital efficiency by increasing third-party capital participation in the investment portfolio,” Du Vernet said. “This may release capital in addition to the stated divestment target.”

The CEO also announced an on-market buyback of up to 10 percent of Dexus securities to address what he called “a sustained disconnect” between the group’s equity market valuation and that of the underlying assets and businesses.

New Fund Series

The upbeat interim results come after Dexus in December launched a new fund series, seeding the inaugural vehicle with a quarter-stake in Brisbane’s Westfield Chermside mall acquired for A$683 million.

The Dexus Strategic Investment Trust series seeks to provide investors with access to high-quality Australian assets held for long-term value creation. DSIT1’s investment follows Dexus Wholesale Shopping Centre Fund’s July acquisition of a 25 percent stake in Westfield Chermside, bringing Dexus’s platform stake in the mall to 50 percent.

Dexus will initially co-invest A$170 million in DSIT1, equivalent to a 49 percent interest, with third-party investors contributing the remainder. Additional third-party equity is expected to be introduced in 2026, targeting a long-term holding of A$50 million.