Dexus, Australia’s leading office real estate owner, has positioned the country as a stable investment haven amidst global geopolitical turbulence. The company, which is listed in Sydney, is preparing for a significant A$2 billion asset divestment over the next three years in response to a weakening commercial property sector.
In its latest announcement, Dexus revealed that it has already completed 25% of its asset sales target, alongside a 13.9% decrease in its adjusted funds from operations (AFFO) for the six months ending December 31. The downturn in earnings reflects the sustained impact of high interest rates over the past three years and the increased use of tenant incentives by office landlords to attract or retain tenants.
Despite these challenges, Dexus expressed cautious optimism, forecasting a potential easing of interest rates and a stabilization of office demand, which could mitigate further declines in earnings. CEO Ross Du Vernet highlighted the market’s potential for recovery, suggesting that the investment landscape may be nearing its lowest point.
“The investment climate has faced significant uncertainty over the last few years, but signs of rate cuts could help restore investor confidence,” Du Vernet said.
He further emphasized Australia’s strong positioning to attract both foreign and domestic investment, particularly in the wake of global trade and regulatory uncertainties exacerbated by geopolitical tensions, including the Trump administration’s policies. Australia’s diversified economy, steady population growth, geographic isolation, and stable governance were key factors that Du Vernet believes will continue to make the country an attractive destination for investors.
While Dexus shares saw a slight drop of 0.8% during mid-session trading, the company’s financial performance showed a positive shift. Despite the AFFO decline, Dexus posted a half-year profit of A$10.3 million, reversing a loss of A$597.2 million in the same period last year, largely due to lower fair valuation losses.
The company has declared an interim distribution of 19 cents per security and reaffirmed its full-year AFFO projection of between 44.5 and 45.5 cents per share, slightly down from 48 cents the previous year.
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